To further optimize the pricing mechanism for issuance of new stocks and facilitate an orderly interaction between buyers and sellers, SZSE released the Implementation Rules on the IPO Stock Issuance and Underwriting Business on the ChiNext Board (hereinafter referred to as the Implementation Rules on IPO) with the approval of China Securities Regulatory Commission (“CSRC”) on September 18. Effective from the date of release, the Implementation Rules on IPO will be applied when issuers publish a stock issuance proposal or a prospectus or initiate stock issuance.

The revision to the Implementation Rules on IPO mainly involves four aspects. First, SZSE has refined the higher quotation removal mechanism, adjusting the removal proportion of higher quotation from not less than 10% to not more than 3%. Second, SZSE has cancelled the requirement that the IPO issuance pricing shall be linked with the subscription schedules and the number of special notices on investment risks. Third, SZSE has strengthened regulation of book building and quotation by laying down the norms and requirements that offline investors shall follow in book building, and defining their acts of violation and regulatory measures. Those who are suspected of violating laws or CSRC’s regulations will be reported to CSRC or held liable for criminal violations by judiciary authorities according to laws. Fourth, SZSE has taken into account CSRC’s revision to the Specifications of Stock Underwriting of IPO under the Registration-based IPO System and canceled the requirement that when the issuance price exceeds the valuation range described in the investment value research report, the difference shall be stated.

Since the ChiNext Board reform and the pilot project of the registration-based IPO system were launched last April, SZSE has kept an open mind, listening to the opinions and advice of the market in a timely manner. From August 20 to September 5, SZSE solicited public opinions on the revision of the Implementation Rules on IPO and listened to market participants by conducting surveys and holding seminars. During the time period, more than 30 market entities including securities companies, institutional investors, enterprises and individual investors submitted their opinions and advice. Market participants fully affirmed the revision, saying that SZSE has promptly responded to market concerns and the revision has shown the regulator’s determination to deepen the market-oriented reform of the new stock issuance pricing mechanism. SZSE has attached great importance to market entities’ opinions and advice. SZSE has carefully studied and categorized the opinions and advice and taken most of them into full account in early demonstration or adopted most of them during the revision.

In the meantime, regarding many market entities’ opinions and advice on the implementation of the removal proportion of higher quotation and the maximum limit by which the price exceeds the lowest of the “four values”, after adequate communication and consultation, the ChiNext Board Stock Issuance Regulation Committee of the SZSE Board of Directors put forward the Initiative on Promoting Game Equilibrium Concerning New Stocks and Guaranteeing Stable and Orderly Issuance. According to the Initiative, in the early stages of adjustment of the Implementation Rules on IPO, first, the removal proportion of higher quotation shall be not more than 3% and not less than 1%; second, underwriters and issuers shall consider various factors comprehensively and prudently to set a reasonable price. When the price exceeds the lowest of the “four values”, the difference shall be not higher than 30%; third, offline investors shall intensify investment research on new stocks and post offers objectively, professionally and independently. SZSE fully respects and supports the foregoing initiative. We will actively put in place relevant arrangements that facilitate the practical operations of issuers, underwriters and offline investors. In the meantime, together with the ChiNext Board Stock Issuance Regulation Committee, we will follow up on the implementation by the market, and continue to study and demonstrate and properly adjust corresponding proportions.

Next, SZSE will continue to comprehensively practice the principles of “system building, non-intervention, and zero tolerance” and the urges to revere the market, revere the rule of law, hold high professionalism, stay alert to risks, and obtain support from various parties across the board. Adhering to the working philosophy of being “open-minded, transparent, honest and impartial”, SZSE will keep a close eye on the operation of systems, continue to evaluate and optimize systems, and strengthen process regulation. Besides, SZSE will urge both buyers and sellers to earnestly fulfill their duties, place orders and make offers independently and objectively conduct pricing in a prudent and reasonable manner, to improve market-based issuance and pricing, jointly keep order of new stock issuance and give greater play to the function of optimizing the allocation of factor resources, thus better serving the real economy and national strategies.