|New rules aim to protect China's securities investors (12/29/03)|
China's securities watchdog is to enforce new rules to protect investors from being misled or deceived about newly listed companies by brokers.
The China's Securities Regulatory Commission (CSRC) will bring the rules into effect from Feb. 1 next year to ensure brokers to issue timely and true information about companies that are to be listed on the stock market.
Chinese securities brokers, if recognized as qualified sponsors,will have to meet strict provisions on companies they help to get listed.
Since China's stock markets were established ten years ago, Chinese securities brokers have a disreputable record for providing false information about applicant companies that has endangered the investments of millions of ordinary Chinese.
A provisional regulation requires new applicants to appoint qualified sponsors to submit their applications.
After listing, the sponsor must remains as its adviser for a period yet to be specified, the regulation adds.
Sponsors will be subject to snap investigations and will be barred from operating if they breach any of the regulations.
If the sponsor fails to meet fully disclose information during the sponsoring period they will be banned for a period of six to 36 months from practicing, the regulation warns.
The watchdog was aiming to build credibility among securities brokers, a market analyst said, stressing the establishment of thesponsorship system would help curb the illegal collusion to rig markets and further boost the confidence of ordinary investors.