China's securities regulator says it backs Ant's blockbuster IPO suspension
Updated 22:23, 05-Nov-2020

China's top securities watchdog noted Wednesday it bolstered the Shanghai Stock Exchange's (SSE) move to hit the pause button on a "hasty" initial public offering (IPO) of Ant Group.

"This is to protect the lawful rights and interests of investors, to ensure transparent, accurate information disclosure, as well as to uphold the fairness and justice in the market," the China Securities Regulatory Commission (CSRC) said in a statement.

Changes in fintech industry regulations have a "huge impact" on Ant Group's operational structure and profit model, the regulatory body said, adding it is poised to work with the Hong Kong Stock Exchange, where Ant was also due to list shares before the IPO was pulled.

"It is a responsible approach to investors and the market to halt Ant Group's hasty IPO in the event of major changes in the regulatory policy environment and conforms to the market rules and the rule of law," the regulator added. 

Ye Lin, a professor at the Law School under Renmin University of China, said in an interview that the SSE clearly stated that the examination and registration of the Sci-tech Innovation Board are divided into the SSE's issuance and listing review and the securities regulator's issuance and registration. 

"The Shanghai Stock Exchange's decision to suspend the listing of Ant Group is well-founded in law, and it is also more conducive to protecting the rights and interests of investors, especially small and medium-sized investors," Ye elaborated.  

He also pointed to the fact that regulatory talks are a relatively minor supervision measure indicating no major violations. Ant Group's changing business activities along with the financial regulatory environment may be the main cause for the halting of its listing. 

"If a material event occurs to an issuer after the CSRC's decision approving the registration of its stocks and before the listing and trading of its stocks, which may result in the issuer's non-compliance with the offering conditions, listing conditions, or information disclosure requirements, the issuer shall suspend the offering of its stocks," according to the SSE's rules governing the Science and Technology Innovation Board. 

Shanghai Stock Exchange said in a later official statement that the decision to halt Ant Group's initial public offering is made by the issuer and lead underwriter based on actual conditions, adding that it "respects and supports this decision and will work with relevant parties to assist in the return of subscription funds".

The SSE agreed that the above decision is a responsible behavior for the market and investors "in the case of regulatory talk with financial regulators before Ant Group's listing, as well as recent changes in the financial technology regulatory environment that may significantly impact Ant Group's business structure and profit model".

After the suspension of this issuance, the SSE vowed that it "will prudently handle the subsequent stock issuance and listing of Ant Group in accordance with laws and regulations".

Dong Ximiao, the chief researcher at the Zhongguancun Internet Finance Research Institute, told China News Agency that the regulatory authorities' decision to postpone the listing of Ant Group fully reflects its determination to protect investors' interests and maintain the long-term healthy development of the capital market.

(Cover: A logo of Ant Group is pictured at the headquarters of the company, an affiliate of Alibaba, in Hangzhou, Zhejiang Province, China, October 29, 2020. /Reuters)