Players are in favour of a case-by-case approach and more flexible pricing The mainland securities watchdog has consulted brokerages and dozens of listed companies on plans to float previously non-tradeable shares, which account for about 68 per cent of China's 4.01 trillion yuan stock market capitalisation, according to sources. Although details of a pilot programme to put the shares on the market had yet to be finalised, there was a consensus among securities market players to adopt a case-by-case approach with more flexibility in pricing, a departure from the controversial mandatory sell-down of state shares in 2001, the sources said. There were early indications the China Securities Regulatory Commission (CSRC) would select at least three listed firms - out of more than 1,282 companies that are quoted on the Shanghai and Shenzhen stock exchanges - to participate in the pilot programme, a source said. Technical preparation for the experiment would probably gain pace after the annual meeting of the National People's Congress in March in order to minimise political resistance, he said. 'I think the pilot programme could be announced in early May at the soonest,' he said. The securities market regulator has discussed various proposals during the past year. One proposal that could gain support from the state asset authority was to discuss the sale of a portion of the non-tradeable shares to the holders of tradeable shares at a price above net asset value, he said. Recent CSRC statements are seen as preparing the public for the experiment. 'The CSRC believes the flotation of non-tradeable shares must be done. The idea is that the more you talk about it, the less alarmed people are,' the source said. Cherry Li Qingyuan, director-general of the CSRC's office of strategy and development, had been quoted by mainland media as saying at a weekend seminar that the CSRC should limit its role to laying down ground rules. This means that any plan to sell non-tradeable shares would have to win majority support from holders of tradeable and non-tradeable shares. Ms Li, a former Goldman Sachs banker, said the CSRC should leave specific technical issues to shareholders. She suggested a pilot programme involving companies which are representative of the economy and with no historical baggage. These shares would have an upside after full flotation. Analysts blamed state ownership for inefficiency, mismanagement and corporate governance abuses at the majority of mainland-listed companies.