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On September 2, 2021, General Secretary Xi Jinping announced in his speech at the Global Service Trade Summit of the China International Trade in Services Fair that he will "continue to support the innovation and development of small and medium-sized enterprises, deepen the reform of the new third board, and establish the Beijing Stock Exchange",  On September 3, 2021, the Beijing Stock Exchange (hereinafter referred to as the "Beijing Stock Exchange") was registered and established, and the Beijing Stock Exchange was officially inaugurated and opened on November 15, 2021. The establishment and opening of the Beijing Stock Exchange have provided important support for promoting the innovative development of small and medium-sized enterprises and deepening the reform of the New Third Board. This article will briefly introduce and analyze the Beijing Stock Exchange from the following perspectives, learn with readers together, and communicate with each other, besides please criticize and correct any shortcomings.

1.The Background of the Establishment of the Beijing Stock Exchange

Since the establishment of the New Third Board market（New OTC Market， NEEQ）our country has provided strong support for the issuance of stocks by small and medium-sized enterprises. However, in recent years, the practice of the New Third Board has not been as smooth as expected. It has always been plagued by insufficient liquidity of funds and additional costs for companies to list. A large number of listed companies delisted. In the process of providing legal services for some New Third Board market companies, the author often heard feedback from listed companies that the New Third Board market had not brought obvious benefits to companies and investors, but was subject to numerous regulatory restrictions and had to bear high costs. In addition, the process of converting to the main board is not smooth enough, so there will be ideas such as "listing on the new third board is very tasteless" and "not as good as delisting".

 Regarding the problems in the practice of the New OTC Market, the state has also made various efforts at the institutional level, such as establishing a hierarchical management system (basic level, innovation level, and selected level), strengthening supervision, etc., but the development of the NEEQ is still " Stumbled, for example, many investors have participated in the purchase of new shares in the large-scale new share issuance activities of the New OTC Market with the greater influence in recent years, but there are many selected enterprises that have fallen below the market after the “winning” of the new shares. In the case of the issue price, even if there are some gains, the efficiency is much lower than that of A shares, and the stock price is very unstable, and trading operations are also very inconvenient. As a result, investors’ interest in the New OTC Market stocks has dropped suddenly, thinking that the New OTC Market is “not formal”, and there is no lack of ideas that they think they are “cheated” and do not plan to enter the New OTC Market again. Therefore, if we want to develop the New OTC market, we still need more powerful new measures to further promote the deepening of the New OTC Market reform and eliminate fraud and innovation. In this context, the Beijing Stock Exchange came into being.

2.The Basic Situation and Characteristics of Beijing Stock Exchange

The Beijing Stock Exchange is our country's third stock exchange approved by the State Council after the establishment of the Shanghai Stock Exchange and the Shenzhen Stock Exchange. It is also our country's first corporate stock exchange. The company name is Beijing Stock Exchange Co., Ltd.

01.The relationship between the Beijing Stock Exchange and the New Third Board is both close and independent of each other

From the business registration information, the Beijing Stock Exchange Co., Ltd. is 100% owned by the National Small and Medium-sized Enterprise Share Transfer System Co., Ltd. (hereinafter referred to as the “National Equities Exchange”). The company’s legal representative, chairman Xu Ming, is the legal representative and chairman of the National Equities Exchange. However, although the National Equities Exchange and Quotations Company is a wholly-owned shareholder of the Beijing Stock Exchange, and some management and operation mechanisms are closely connected and similar, the two are closely related, but the Beijing Stock Exchange cannot be simply regarded as a component of the New Third Board: First, the two are independent legal persons, and their operation and management are separate systems; secondly, the two are different types of securities trading venues, and there are differences in positioning and operational requirements, and they cannot be simply confused. Judging from the situation of the Beijing Stock Exchange, it is more appropriate to regard it as a connection to the New Third Board and other securities trading venues in a relatively independent manner under the capital market system.

The source of the above screenshot: Enterprise Check Query Interface

https://www.qcc.com/firm/9b599f4c039b182587a88ecfee89226d.html

02.The Beijing Stock Exchange is a corporate stock exchange

In terms of nature, the Beijing Stock Exchange not only has the functions of a traditional stock exchange (that is, it provides places and facilities for centralized securities trading, etc.), but also has unique characteristics (corporate system).

So, what are the securities trading venues in our country? What is the particularity of the company system?

The securities trading venues stipulated in Chapter 7 of our country's "Securities Law" include: stock exchanges, other national securities trading venues approved by the State Council, and regional equity markets. According to the provisions of Articles 2, 4, and 6 of our country’s "Measures for the Administration of Stock Exchanges", a stock exchange refers to a stock exchange established by the decision of the State Council to organize and supervise securities transactions. It is governed by the China Securities Regulatory Commission ( Hereinafter referred to as the "CSRC") supervision and management.

Made by the author

Our country’s stock exchanges are divided into a membership system and a company system. The stock exchange property accumulation of the membership system belongs to the members, and the rights and interests are shared by the members. There is a general meeting, a board of directors, a general manager and a board of supervisors. Only members can enter the stock exchange to participate concentrated transactions; corporate stock exchanges have shareholders meetings (except for one-person limited liability companies), a board of directors, a general manager, and a board of supervisors. To facilitate understanding, the author summarized the differences between the membership system and the company system through the understanding of the "Securities Law" and "Stock Exchange Management Measures" and other related regulations and practices:

Made by the author

The organizational structure of the Beijing Stock Exchange is

以上截图来源：北交所官方网站

http://www.bse.cn/company/organization.html

Made by the author

 03.Beijing Stock Exchange has special macro requirements

At the same time, according to the content of the official website of the Beijing Stock Exchange, the Beijing Stock Exchange needs to stick to the "one positioning", handle the "two relations", and achieve the "three goals", which are summarized as follows:

 Made by the author

04.The Beijing Stock Exchange has relatively moderate requirements for individual/natural person investors

Regarding individual/natural person investors, the Beijing Stock Exchange has relatively moderate requirements and is suitable for ordinary investors. The main differences between the requirements of the Beijing Stock Exchange and the Shanghai Stock Exchange, Shenzhen Stock Exchange and New Third Board are as follows:

Made by the author

In summary, the Beijing Stock Exchange was established on the basis of the New Third Board, which has higher specifications than the New Third Board, and is on par with the Shanghai Stock Exchange and the Shenzhen Stock Exchange. The relevant rules have translated and referenced the rules of the New Third Board selected layer and the Shanghai and Shenzhen Stock Exchange. At the same time, it has played an important role in the interconnection between the NEEQ and the Shanghai and Shenzhen Stock Exchanges, which can be described as a major measure of the NEEQ reform.

一、 Conditions for Issuing Shares on the Beijing Stock Exchange

The Beijing Stock Exchange was established on the basis of the New Third Board to undertake the selected layers of the New Third Board as a whole. Since the opening of the market, there have been 81 listed companies in the first batch, of which 71 selected-tier listed companies have been directly transferred to the Beijing Stock Exchange for listing, and 10 companies that have been approved for selected-tier listed companies have directly issued new shares on the Beijing Stock Exchange.

"Beijing Stock Exchange Stock Listing Rules (for Trial Implementation)" and "Registration and Administration Measures for the Public Issuance of Stocks to Unspecified Qualified Investors (for Trial Implementation)", the National Equities Exchange and Quotations System has been listed for consecutive A listed company with a 12 month-long innovation layer can register as an issuer to apply for the issuance of stocks. In addition, other conditions for public offering of shares on the Beijing Stock Exchange are basically the same as those for entering the selection layer, as follows

Made by the author

二、 The value and future prospects of the establishment of the Beijing Stock Exchange

01. The establishment of Beijing Stock Exchange is of great significance

Compared with the Science and Technology Innovation Board of the Shanghai Stock Exchange and the Growth Enterprise Market(Gem) of the Shenzhen Stock Exchange, the Beijing Stock Exchange focuses more on supporting the development of small and medium-sized enterprises, adding important financing channels for small and medium-sized enterprises; The difference is relatively loose, giving more opportunities for SMEs to go publicly.

At the same time, the Beijing Stock Exchange can not only undertake the listing of companies listed on the NEEQ that meet the requirements, but also transfer companies that meet the Shanghai and Shenzhen listing requirements to the Science and Technology Innovation Board and Gem. It will also establish a docking channel for the regional equity market. Realizing the "interconnection" of our country's securities trading venues, forming a good market ecology, developing inclusive amounts, and promoting the vigorous development of small and medium-sized enterprises are of vital importance. Since listing on the Beijing Stock Exchange requires first listing on the New OTC Market, and the requirements and cost of listing on the New OTC Market are lower than those directly on the Shanghai Stock Exchange and Shenzhen Stock Exchange, the NEEQ will be more attractive to companies.

The establishment of the Beijing Stock Exchange has brought new opportunities to our country's capital market, is of great significance to the establishment of a multi-level capital market, and has also filled a gap in the Northern Stock Exchange. I look forward to the high-profile establishment of the Beijing Stock Exchange, which can effectively encourage more companies to enter the capital market and no longer regard the NEEQ listing as a “chicken rib”. It can increase investor interest in the NEEQ, enhance capital liquidity, and coordinate my country’s regional economic balance. The development and promotion of economic construction in the north can promote the development of my country's real industry and promote the overall situation of my country's innovative enterprises and economic construction.

02.The effect of the establishment of the Beijing Stock Exchange has yet to be tested in practice

Of course, the Beijing Stock Exchange has just been established and opened for market operation. Although a lot of preparatory work has been done in the early stage, many problems will inevitably arise in the specific operation process in the future, such as: whether the transfer channel can operate smoothly, transparently and conveniently, and go public. And the cost of transfer, whether the core indicators of listing have been expanded, whether investors recognize, etc., all need to be discovered and resolved in the process of practical operation. At the same time, if you want to solve the liquidity problem of the new third board market through the Beijing Stock Exchange, you still need to focus on attracting investors to enter the market. By improving the quality of the issuer, the stability of the market, and the convenience of transactions, investment Investors have more confidence and interest in the Beijing Stock Exchange market.

In summary, the establishment of the Beijing Stock Exchange is of great significance to the development of our country's capital market, real economy, and small and medium-sized enterprises. It is an important measure for our country to deepen the reform of the new third board and even for the development of the entire securities market. It is worth looking forward to in the future. At the same time, as a new trading venue, the Beijing Stock Exchange also provides a broader business market and challenges for industry-related companies and institutions. All relevant institutions and individuals should also discover and seize this opportunity to give full play to their value. Provide power for the healthy development of the stock exchange market.

“Statement:

This article was originally created by the lawyers of JAVY Law Firm. It only represents the author's own views and should not be regarded as a formal legal opinion or suggestion issued by JAVY Law Firm or its lawyers. If you need to reprint or quote any content in this article, please indicate the source