By Tu Lei (chinadaily.com.cn)
Updated: 2007-12-18 14:00

The preparation work for a second board market is underway, and it is expected to be launched in the first half of next year, China Securities Journal reported today, citing an official with the China Securities Regulatory Commission (CSRC).

The official, who declined to be named, said the second board may have fewer strict listing requirements than the main board towards financial indexes, but the standard could not be too low at the initial stage.

"A company's share capital when listing in the second board should be not less than 30 million yuan ($4.06 million)," he said.

The second board will target innovative enterprises and companies featuring self-innovation, agricultural industrialization and regional features.

He said the CSRC would enhance risk prevention from different aspects including market access, continuous supervision, a delisting system, trading system and investor education. It also has requirements on issuers, management level and shareholders' honesty.

Cheng Siwei, vice Chairman of the Standing Committee of the National People's Congress, recently said "The sooner we set up the second board market, the better."

Cheng said it is the right time to build a second board as China has made progress on setting up a multi-level capital market system, and the second board can help solve excess liquidity.

The process of setting up a second board stock exchange in China has lasted almost ten years.

In December 1998, the National Development and Reform Commission put forth the proposal of setting up a second board to the State Council.

In May 2000, the State Council principally agreed for the CSRC to set up the second board market.

In May 2004, the CSRC then agreed that the Shenzhen Stock Exchange set up the second board for small- and medium-sized enterprises.

In August 2007, the State Council approved the draft rules on listing on a second board market.