China's stock regulators are tightening their early-warning system for listed companies, requiring all firms to make quarterly financial reports. The move, which will take effect next year for most companies, is part of a plan to improve the quality of information available to investors and strengthen regulatory mechanisms in a market that has been plagued with abuses. Under present rules, companies listed on the Shanghai and Shenzhen stock exchanges are only required to publish half-year and full-year financial statements. 'Starting in 2002, all listed companies must also publish quarterly results within a month after the end of the first and third quarter,' the Shanghai Securities News reported, quoting the China Securities Regulatory Commission (CSRC). The watchdog said all companies in the exchange's special treatment category must publish quarterly statements beginning in the third quarter of this year. Companies are placed in the category after reporting two consecutive years of losses. Once they receive this classification, their stock price can fluctuate only 5 per cent per day compared with 10 per cent for other shares. Quarterly reports will not have to be audited, but they are still seen as a major step forward in boosting market supervision and transparency. 'This is very good news,' said Hu Xiaodong of China Securities. 'It will make our analysts a bit busier but it will increase market transparency.' That response was echoed elsewhere in the securities sector. 'This is a positive development,' said Feng Yi, compliance director at Huaan Fund Management. 'This will be a very significant step as far as funds are concerned.' Although China's stock markets have been among the world's best performing in recent years, there have been fears that the growth may be undermined by poor corporate governance, fraud and lack of transparency. Recently, 12 companies were censured for failing to abide by rules to notify authorities about major transactions. Regulators have said eight of the mainland's 10 fund management firms had engaged in insider trading or price-fixing. One economist compared China's stock market to a casino, saying manipulation and price rigging were rampant. Analysts have long complained that the lack of transparency was a huge problem for market development. Too often, listed companies had hidden significant developments until their mid-year or full-year report must be made. They said too many of China's 1,100 listed companies were poorly managed. However, the new rule would make trends apparent sooner. The CSRC did not say what it would do with stocks in the particular treatment category. Companies in this group have had three consecutive years of losses and are allowed to trade only once a week. The market watchdog has been hinting it will take action soon against some of the market's worst performers and strip them of their stock exchange listing. Last week, the Shenzhen and Shanghai markets re-issued warnings that particular treatment-classified companies faced delisting if they were unable to publish results by the end of this month. A decision to allow companies to delist is seen as a key commitment by the authorities to let the market decide which companies should thrive and which should die. So far, no listed company has been forced to give up its coveted place on a domestic stock exchange.