The China Securities Regulatory Commission (CSRC) wants to prune the nearly 900-strong backlog of companies seeking to launch initial public offerings on the domestic stock market, the Wall Street Journal reported.
The regulator aims to trim the pipeline of firms applying for IPOs by weeding out entities deemed unsuitable, the paper said, citing people familiar with the matter.
“The current size of the backlog is too heavy for the market to absorb, so the CSRC is basically asking many of the IPO candidates to drop out or be kicked out so as to ease the pressure,” a source was quoted as saying.
“There are internal discussions within the CSRC that point to a desire to slash the length of the IPO queue by as much as one third,” the person said.
Leading brokerages are already carrying out their own reviews of which companies they should continue to support through the process, according to the report.
CSRC’s move comes as the number of companies awaiting approval to go public on China’s stock markets has ballooned in recent months.
The backlog started to expand particularly after the CSRC banned IPOs for several months following the crash in Chinese shares last summer.
The CSRC is worried that a sudden supply of new listings could depress markets, which have stabilized in recent months after falling sharply again at the start of 2016, the Journal said.
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