CSRC probe to curb 'frothy' IPOs

The mainland securities regulator has launched an investigation into dozens of underwriters and institutions in an attempt to rein in frothy initial public offerings, amid increasing complaints about questionable pricing behaviour.

China Securities Regulatory Commission chairman Xiao Gang pledged to make stock markets transparent and fair but market observers doubt the latest move will be enough to effectively protect the interests of retail investors.

The CSRC said it decided to probe 13 underwriters and 44 institutions, sending a message to investors that it would take a harsh stance on the setting of artificially high prices for share offerings, a practice that has left thousands of individual investors with losses after listing.

Sources said the increased efforts to police IPO price consultations showed Xiao's determination to shore up investor confidence after the CSRC suspended more than a dozen offerings to avoid a huge liquidity drain.

But they added that based on the existing regulatory and legal controls, it was unlikely that anything concrete would result.

Beijing lifted a 15-month ban on new listings this month, with the CSRC granting approval for a flood of fundraising.

However, the large size of some of issues and their lofty offering prices sent tremors through the mainland's stock markets before the CSRC stepped in to halt some fundraising processes.