New Third Board confirms two-way division

The National Equities Exchange and Quotations, China's national over-the-counter share trading market, will soon adopt a new policy that will divide listed companies into two segments－as the securities regulator intends to streamline the regulation of the nascent and rapidly growing market.

The regulator is likely to announce the policy by the end of this month, media reported on Tuesday.

The rules will divide the NEEQ market, better known as the New Third Board, into two segments－the innovative market and the basic market.

The China Securities Regulatory Commission issued a draft regulation in March to solicit public opinion.

The division will be based on a set of indicators of financial performance and shareholding structure of the listed companies, to ensure the relevant regulation is appropriately applied to them.

Analysts said the much-anticipated market division will allow the board to meet the different financing needs of companies, improve regulatory efficiency and reduce the cost of information collection for investors.

They said it also highlighted the urgency to better regulate the NEEQ market, which has seen explosive growth in the number of listed companies since its establishment in 2012.

The NEEQ market, which serves as a financing platform for startups, had attracted 7,357 companies as of Wednesday with a total market capitalization of 2.9 trillion yuan ($440 billion).

The number of listed companies was more than the combined amount on the Shanghai and Shenzhen stock exchanges.

Sources from securities firms told China Daily that there is high probability the regulator will roll out the final rules by the end of this month and will be officially adopted in early June.

But details about the revision of the draft rules remain unclear, according to the sources.

A press official at the NEEQ market, however, said that final rules were ready but the date to announce them has not yet been decided.