Top Biz News

Brokers brace for tighter rules

(Shanghai Daily)
Updated: 2007-03-23 16:02

China's stock regulator plans to raise the threshold for brokers which seek back-door listings and also to boost oversight to curb potential insider trading during the takeover process, industry sources said Thursday.

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Brokerages which want to acquire existing public firms for a listing must have 800 million yuan (US$103 million) in net capital, the sources said, citing a draft regulation sent to them.

The firms must also have earned a combined profit of at least 100 million yuan in the latest two years and to be ranked among the top 20 players in either brokerage or investment banking business, they said.

In addition, the regulator is set to closely monitor employees at both brokers and their takeover targets to see if they illegally profit from gaining insider information, according to the people.

Several Chinese brokers have been pursuing public stock sales via taking over already-listed firms as the regulator hopes to create stronger participants to beef up the industry's competitiveness.

But the frenzy has also spurred market speculation over potential takeover targets, making their shares rise sharply but only to tumble later when the rumors turned out to be just that.

"The watchdog has found some irregularities during (previous) back-door listings," said a brokerage source inShanghai. "It wants to only let qualified brokers list and hopes the moves will not stir irregular stock-price movements."