China's new bourse for small businesses set to spur innovation

The Beijing Stock Exchange will start trading on Nov 15, a key step forward in China's efforts to revamp its capital market as the new bourse will serve myriad small and medium-sized enterprises (SMEs).

Announcing the launching date in a statement on Nov 12, the new exchange said it is all geared up for trading, with the first batch of 81 companies expected to see their shares traded starting from Nov 15.

The launch came two months after China announced plans for setting up a new exchange, a move widely welcomed by the market as it aims to address the long-standing financing conundrum of SMEs.

The novel bourse, built upon the existing National Equities Exchange and Quotations, or the "new third board," will play a different role in China's capital market compared with the Shanghai and Shenzhen stock exchanges while strengthening interconnectivity with the two stock exchanges.

The announcement has triggered great interest and eagerness in the market. Over the past two months, investors and firms have kept a close eye on the latest developments of the exchange, vying with one another to obtain qualifications for trading.

As of Nov 12, over 2.1 million new investors had applied to become qualified investors, said the exchange, adding that the total number of eligible investors will exceed 4 million after the bourse starts trading.

A total of 112 securities firms have been granted memberships so far, it said.

Six documents on operation regulations were also unveiled on Nov 12, together with the other 45 guidelines issued earlier, constituting the bourse's self-regulation system with rules covering issuance, financing, supervision, and trading, among others.

Commenting on the first batch of firms, Li Xudong, managing director of China Securities, said these companies are "full embodiments of the bourse's role as a primary platform serving innovative SMEs."

All 81 firms, as top performers in their respective sectors, boast sound business operations and great growth potential, Li said.

Covering 25 major industries of the economy, these firms come mainly from sectors like advanced manufacturing, high-tech service, and strategic emerging industries. Their average spending on research and development tops 25.36 million yuan (about $4 million).

While an array of firms are lining up to go public, the exchange said it will enhance supervision and step up efforts to improve the quality of listed firms, rolling out measures to strengthen pre-listing review, clarifying responsibilities of intermediaries and listed firms, and creating smooth channels for delisting.

The launch of trading marks the beginning of an exploration journey for the Beijing Stock Exchange, market watchers said, encouraging all parties involved to become more adaptable and inclusive and work together to foster a benign market environment to facilitate the stable and sustainable growth of the new bourse.