In an announcement made on Friday after state media reports, the Chinese State Council said on Saturday that the state will be liberalizing and expanding the access of all qualified small and medium-sized enterprises (SMEs) to its over-the-counter (OTC) market. Reports on Friday quoted unnamed sources who said a reform on China's economy could happen before the year ends, with some claiming before December 25.
According to a Reuters, report, the State Council has instructed the China Securities Regulatory Commission to eliminate procedures to approve applicant companies that have less than 200 shareholders. China's announcement said the reform hoped to spur institutional investors into participating in financial vehicles like investment funds, foreign funds, particular brokerages and insurance companies.
The Chinese government's move to ease up access in the OTC market followed the announcements made earlier that financial regulators will be allowing companies in China to launch their IPOs in the mainland beginning early 2014. The OTC market, the report said, focuses on facilitating private investments in smaller firms in China.
Beijing was said to be putting efforts in order to expand credit access for its small and medium-sized businesses, or SMEs. SMEs are said to be too small to be approved to get listed and are deemed by Chinese banks to approve financing because of risks associated with it.
However, analysts have said such initiatives like high-yield bonds and OTC exchanges for smaller enterprises had been hampered by restrictions in regulations and the lack of interest from investors. Moreover, efforts to convince banks to extend credit to SMEs had mostly failed.
Reuters said the primary OTC market in China was launched originally in the capital of Beijing back in 2006. About 200 firms had traded on the platform, and was later on expanded to the city of Shanghai.
The news agency noted that other provinces and cities in China had already announced their plans to establish local platforms.
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