China plans OTC market to help startups raise funds

Summary:Country's securities regulator to roll out new over-the-counter (OTC) equity market to provide new financing channel for small, unlisted firms, with a focus on high-tech companies, report states.

China's securities regulator is preparing to roll out a new over-the-counter (OTC) equity market, but the plan is still pending official cabinet approval.

According to a Reuters report Wednesday, Guo Shuqing, chairman of the China's Securities Regulatory Commission, said the "new third board" aimed to provide a new financing channel for small, unlisted firms with a focus on high-tech companies.

He added that his agency had submitted the final version of the plan to the State Council--China's cabinet--where it is awaiting final approval. His comments came during a speech on Tuesday at a construction conference, according to Reuters.

The newswire noted that a trial version of the OTC market, based in Beijing's Zhongguancun district, was launched in 2006. It added that this was similar to the Over-the-Counter Bulletin Board in the United States and provided an electronic platform for non-listed companies to raise funds.

The OTC board is one of the latest measures by Chinese policymakers to boost access to credit for China privately-owned small and midsize businesses (SMBs), which are largely shut out from the country's financial system, which is dominated by state-owned banks lending to state-owned companies.

An earlier study had noted that Chinese SMBs were facing greater cost pressures, with cost of labor and raw materials the two largest factors.

Topics: SMBs, China


Loves caption contests, leisurely strolls along supermarket aisles and watching How It's Made. Ryan has covered finance, politics, tech and sports for TV, radio and print. He is also co-author of best seller "Profit from the Panic". Ryan is an editor at ZDNet's Asia/Singapore office.

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