A man wearing a protective mask is seen inside the Shanghai Stock Exchange building, as the country is hit by a new coronavirus outbreak, at the Pudong financial district in Shanghai, China February 28, 2020. REUTERS/Aly Song/File Photo
SHANGHAI, Aug 30 (Reuters) – China's securities association has drafted rules to set up a firewall between investment bankers and analysts in deals to ensure unbiased pricing of initial public offerings (IPOs), the official Shanghai Securities News reported on Tuesday.
Bankers in an IPO deal are barred from discussing profit forecasts and valuations with analysts, who should make conclusions independently, the newspaper said, citing rules drafted by the Securities Association of China.
Brokerages should also regularly check on their internal firewall systems, according to the rules, which were distributed to brokerages for their opinions, the newspaper said.
Such rules will prevent distortion of IPO pricing, protect investor interest in a market crucial to funding innovation and growth in the world's second-biggest economy.
China has adopted a U.S.-style, registration-based IPO system in some parts of its stock market to make pricing of shares more market-oriented, with plans to soon expand the reform to the entire market. read more
A company's valuation report is increasingly important under such an IPO system, but analysts have inadequate levels of independence in writing such reports, some of which are grossly inaccurate in their projections, the newspaper said, citing China's securities association.
To avoid conflict of interest, investment bankers will be barred by the rules from discussing earnings estimates and valuations with analysts in an IPO deal, though they can communicate on the basics of the issuer in the presence of compliance officers, the paper said.
The rules also ban issuers, investment bankers and salespeople from exerting pressure on analysts to skew their research conclusions, the newspaper said.
Our Standards: The Thomson Reuters Trust Principles.
Shares crept up slightly and bonds held steady on Tuesday as investors awaited the next round of likely gloomy inflation data while also juggling concerns about Europe's energy crisis, a looming recession and more rate hikes.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2022 Reuters. All rights reserved