Countdown to Beijing bourse debut starts

The countdown to the opening of the highly anticipated Beijing Stock Exchange has started with the release of the final two sets of basic business rules.

As approved by the China Securities Regulatory Commission, the country's top securities watchdog, the BSE released on Tuesday two sets of basic business rules concerning transactions and bourse member management. The related 31 detailed guidelines covering financing, mergers and corporate supervision were released on the same day. All the above measures will take effect on Nov 15.

The BSE released investment compliance management rules on Sept 17. The bourse released on Friday four sets of rules regarding stock listings, revisions, issuances for unspecified qualified investors and company restructuring processes, all of which will take effect on Nov 15. At this point, all seven basic business rules have been released. It is thus widely assumed by industry insiders that the BSE will commence its formal operations on Nov 15.

The bourse said on its official website that it will release rules to provide access to qualified foreign institutional investors and renminbi-qualified foreign institutional investors under the guidance of the CSRC.

A-share companies with businesses related to the BSE reported an average daily increase of 1.12 percent on Wednesday, according to market tracker Wind Info, while the benchmark Shanghai Composite Index shed 0.2 percent.

The BSE, which is seen nurturing more technologically advanced SMEs, will initially be built upon the NEEQ Select, the highest tier of the eight-year-old National Equities Exchange and Quotations system.

As of Sunday, there were 68 NEEQ Select companies, which will be directly transferred to the BSE. But according to Zhou Yunnan, founder of Beijing Nanshan Jingshi Investment, there may be 82 listed companies when the new bourse debuts in the middle of the month, as there are another 14 companies expected to complete subscriptions to the NEEQ Select before Nov 15.

The daily price fluctuation of BSE-listed companies is set at 30 percent and no limit will be set on the first trading day. Individual investors holding at least 500,000 yuan ($78,134) worth of assets in their personal securities accounts will be allowed to trade on the exchange, according to public information.

Zhu Haibin, chief NEEQ analyst at Essence Securities, said there will be up to 7.89 million individual investors trading on the new stock exchange. As investment demand is expected to remain strong, the liquidity and pricing power of the exchange will therefore be elevated, he said.

The launch of the BSE will not only provide more financing support to innovative SMEs but also enrich the Chinese capital market, said Janice Hu, China CEO at global financial services provider Credit Suisse.

The central regulators are dedicated to improving the Chinese capital market system and providing more diversified financing channels, including perfecting the mechanism for overseas entities to go public onshore in setting up the BSE. Therefore, the Chinese unicorn companies can better use the domestic and overseas markets. Credit Suisse is thus willing to be part of the ongoing development of the Chinese financial market and further expand its mapping in the country, she said.