China’s top securities regulator on Friday introduced a series of measures to enhance protections for small investors, curb pricing manipulation in initial public offerings (IPOs), and promote long-term equity holding, reports Caixin. The China Securities Regulatory Commission (CSRC) issued new guidelines to reform the offline IPO placement mechanism, giving larger share allocations to institutional investors that commit to longer lock-up periods. The changes are intended to encourage long-term investment behavior and reduce speculative trading in new listings.
The CSRC cited recent cases, such as the IPO of biotechnology firm Wuhan Healthgen Biotechnology Corp., where top-tier institutional investors received 10 times more shares than lower-tier bidders due to extended lock-up commitments.
The guidelines also aim to address pricing irregularities. Regulators will strengthen evaluations of institutional investors and restrict participation by those found to have deliberately inflated or suppressed bids. Under China’s current IPO pricing system, offline institutional investors play a critical role in determining offering prices through a bidding process.