Market forces to determine IPO values in new mainland reform

The mainland's securities regulator is set to unveil a framework for initial public offering reform soon that would allow market forces, rather than its review committee, decide the worth of the new shares.

The China Securities Regulatory Commission is expected to publish the guideline at the end of next month, in a move designed to ease funding difficulties facing mainland enterprises.

According to two sources close to the regulator, it is fast-tracking the preparations for the reform following directives from the State Council.

They added that the reform could also be implemented earlier than expected after the cabinet, led by Premier Li Keqiang, announced after a weekly meeting on Wednesday that the government would strengthen efforts to lower companies' funding costs while widening their access to capital.

Over the past two years, the CSRC has been mulling a plan to adopt a listing system based on companies' information disclosure that would see it partially relinquish its authority to review fundraising applications.

Under the new system, companies will be required to publish all the information about earnings and business operations after they file a listing application, with the regulators only responsible for questioning the applicants regarding the truthfulness of the documents.

Presently, the CSRC's review committee assesses the sustainability of a company's earnings and its position in the industry before approving its initial public offering.