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IPO Reform Or Giving Brokerage Firms Greater Allocation Rights

2012/1/27 16:11:00 28

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The industry has recently said that in order to curb the "new shares fever", the focus of the IPO reform next step is mainly the IPO price formation mechanism, which may draw on the US capital market mode and give brokerage firms greater rights to allotment.

American auction applies to Seller's market.

American auction and Dutch auction are two basic modes of bidding.

Usually, in the seller's market (bid market, the product is in short supply and the seller is in a strong position), it is suitable to adopt the American bidding method in order to protect the investors' rights and interests. On the contrary, in the buyer's market (offer market, the product supply exceeds the demand, the buyer is in a strong position), it is suitable to adopt the holed bidding method in order to protect the pedestrian's rights and interests.

Dong Dengxin, director of financial and Securities Research Institute, Wuhan University of Science and Technology

explain

In other words, the bid price of all winning bidder is the same. It adopts the lowest price quoted by all successful bidder.

On the contrary, in the American auction, the median price of each winning bidder is their respective actual quotations, that is to say, the bid price of the winning bidder is different, high and low.

This shows that the Dutch auction is easy to "push up" the price tag, on the contrary, the American auction is easy to "low" in the tender price.

At present, in the A share market, the bidding method is adopted under the new issue network.

On the face of it, the biggest advantage of the Dutch auction is the "price fairness", that is, the net price is exactly the same as the actual purchase price on the Internet, but the biggest drawback lies in this. Because it takes the lowest bid of all the winning bidder as the unified bid price of the net, it is obvious that the high bidder can get a relatively low price placement, so that almost all the inquiry objects dare to push up the quotation for obtaining the selling opportunity, and the result will be a high price.

Under the American bidding method, the quotations from high to low are "real price matching", and the winning bidder with low price will take advantage of it.

This is because all the enquiry objects are trying to get cheap placement opportunities, and naturally do not want to offer high prices. Therefore, the American bidding method is conducive to "

Do low

The price is marked.

Study on increasing proportion of institutional subscription

From the perspective of the development of international market, the cumulative American style

Order

The inquiry mechanism has gradually become the mainstream.

The mechanism gives the Underwriters a large share of free distribution of new shares, so that they can treat new issue stocks in accordance with certain principles and maintain relations with institutional investors.

Under this system, the Underwriters can independently decide the distribution of shares, so institutional investors who have long-term cooperation with the Underwriters can get a more favorable share share.

"In stock pricing,

Underwriting

On the other hand, we should further simplify procedures and control and enhance the responsibility of underwriting.

The head of the securities and Futures Commission said it would give brokers more rights to issue new shares in the future.

It is reported that China has not introduced the broker's own placement mechanism.

Reason

Prior to "unbeaten new shares", the acquisition of new shares means huge profits, giving the securities dealers the right of independent placement, which easily leads to commercial corruption in the process of allotment of new shares.

At present, the growth of new shares has been greatly reduced, and new shares have broken down frequently.

This is because, after 2009, the window of issuing price has been cancelled, and the issue price has risen and broken has gradually become the norm.

On average, the average increase in the first day of IPO in 2010 and 2011 was more than 30%, the first day in 2010 was about 7%, and 2011 was about 27%.

To fight new is not without risk. This creates the opportunity for reform to give brokerage firms greater allotment rights.

The Commission is in the process of giving greater rights to brokers.

Research

Increase the subscription ratio of institutional investors.

"Due to the increased risk of new shares, we should study ways to amend the relevant measures and consider abolishing the upper limit of the proportion of subscriptions under the new network."

Zhu Congjiu, assistant chairman of the SFC, said that by increasing the proportion of institutional investors subscribing under the net, it would increase the responsibility and price sensitivity of the institution in pricing.

This is an international practice that strengthens bargaining power and restraining excessive price forces.

At present, the proportion of online and offline IPO is detailed.

Regulations

The Underwriters lack the right to choose, and the underwriting liability is not enough, which makes it difficult for the underwriters to suppress the higher prices from the perspective of the responsibility of the customers.

In addition, the distribution of pricing under the net is too low, the quotation is random and the pricing is not binding.