People pass by the office building of China Securities Regulatory Commission in Beijing. Photo: VCG

China's securities regulator has issued basic rules for the new Beijing Stock Exchange that will be effective on November 15, a move that experts say signals China is a step closer to the official launch of the exchange designed to support innovative start-ups.

The China Securities Regulatory Commission (CSRC) officially released a set of rules on the Beijing Stock Exchange on Saturday that cover areas such as financing, information disclosure, corporate governance, supervision and management.

The rules aim to build an institutional system that is consistent with the characteristics and growth stage of small and medium-sized enterprises (SMEs), and fully reflects the market characteristics of inclusiveness and flexibility, the CSRC said.

China in early September announced plans to set up the Beijing Stock Exchange, to complement the other two bourses in Shanghai and Shenzhen, South China's Guangdong Province, and to create a main venue for service-innovative SMEs.

It showed that the systems and rules are now in place to specifically support SMEs, and the new stock exchange may open as early as November, Zhou Yunnan, founder of Beijing Nanshan Jingshi Investment, told the Global Times on Sunday.

"Since the rules will be officially implemented on November 15, the Beijing Stock Exchange can officially open as early as November 15 in theory, but the specific launch time could be officially announced in advance at an appropriate time," Zhou said.

According to the CSRC, the system of the Beijing Stock Exchange will be based on the selection tier of the New Third Board. There are 68 companies on the selection tier of the New Third Board, mostly in medicine, mechanical equipment, new materials and information technology, which will float on the new exchange when it launches. 

The third-quarter financial reports showed that 66 out of the 68 companies reported profits, and 45 had net profits of more than 30 million yuan ($4.6 million), accounting for 68.2 percent.

The establishment of the Beijing Stock Exchange is expected to alleviate the bottleneck problem of innovative SMEs that often have difficulty raising fund, Chen Ke, partner of Beijing Chang'an law firm, told the Global Times.

The launch of the Beijing Stock Exchange will encourage innovation-driven innovative companies to seek a domestic listing, instead of a US listing, experts said.

"Most Chinese companies choose a US listing because of the lower threshold and listing requirements. Therefore, if the new exchange can fully meet the development requirements of those innovative enterprises, they will naturally choose to list at home," Chen said.

Experts believe that in the future, the Beijing Stock Exchange will usher in high-speed capacity expansion. A couple of IPO applications have been received for the selection market, and they are expected to be approved before November 15. 

In addition to the 68 stocks, 13 new listings on the selection layer after the announcement of the formation of the Beijing Stock Exchange are expected to join the new exchange. Also, more than 200 enterprises are preparing for a listing on the selection layer, a reserve for the new stock exchange, according to media reports.

"The number of listed companies on the Beijing Stock Exchange can soon narrow the gap with the STAR board and ChiNext, forming a major support for the nation's economic transformation and industrial upgrading, especially for the development of the high-tech industry," Dong Dengxin, director of the Finance and Securities Institute of Wuhan University, told the Global Times on Sunday.