US securities regulator pushes plan that could delist Chinese firms

The Securities and Exchange Commission intends to propose a regulation that would lead to the delisting of companies for not complying with US auditing rules

The regulation will depend on the exchanges to execute it by delisting companies that fail to maintain compliance with the rules

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Securities and Exchange Commission chairman Jay Clayton. Photo: AP

Published: 11:38pm, 17 Nov 2020Updated: 11:02pm, 18 Nov 2020

The US securities regulator is pushing ahead with a plan that would require US-listed Chinese companies to use auditors overseen by the US or face delisting from US stock exchanges.

The proposal by the Securities and Exchange Commission (SEC) is likely to be open to public comment in December, according to The Wall Street Journal.

The regulation is part of a concerted effort to get tough on China as the Trump administration winds down in the coming weeks to mark its legacy on China issues and make certain policies difficult for the incoming Biden administration to unwind.

This is the second move since the November 3 presidential election by the Trump administration to cut Chinese companies off of US capital markets. Last week, Trump signed an executive order prohibiting Americans from investing in Chinese firms that are deemed linked to the Chinese military.

“While movement regarding the potential delisting of Chinese [American depositary receipts] from US exchanges continues to advance, this is happening slowly and with abundant implementation wiggle room,” said Andrew Bishop, global head of policy research at New York-based Signum Global Advisors.