CSRC axes rule requiring advance payment for mainland IPO subscriptions

The China Securities Regulatory Commission has dropped a requirement that subscriptions to all initial public offerings be paid in advance, Agence France-Presse reported. The rule had helped systemically undervalue firms about to list on the mainland, offering nigh-guaranteed profit to those able to secure shares ahead of a company’s debut. The advance payment requirement had also heightened market volatility by forcing investors to divert otherwise productive capital and sell their holdings to raise funds for applications for inevitably over-subscribed IPOs, drying up liquidity in the days or weeks ahead of listings approved and scheduled by the commission.