Xiao Gang, chairman of the China Securities Regulatory Commission (CSRC), outlined Monday a roadmap for improving the capital market’s support of small and micro enterprises, CBN Daily reported.

The State Council, China's cabinet, held a national television and telephone conference for exchanging experience in financial service to small and micro enterprises. Xiao said at the conference that the Commission will establish a refinancing system for growth enterprises board (GEB) to provide small-sum, fast and flexible financial solutions for small and medium enterprises (SMEs).

Xiao added that the Commission will speed up the pace of extending the pilot share transfer system of SMEs to the whole country and introduce an approach of mergers and acquisitions for non-listed public companies.

SME board and GEB have always been the main channel for the capital market to support direct financing of SMEs. By the end of June, SME board had 701 listed companies, which raised 479.3 billion yuan in initial public offering, and GEM had 355 listed companies, which raised 231 billion yuan.

GEB has been launched for four years without a refinancing mechanism. Many GEB-listed companies have further refinancing needs, while only a few issued corporate bonds. Until now, only seven GEB companies have raised 1.98 billion yuan through non-public issuance of corporate bonds. Some insiders believe that high-growth GEB companies are more suitable for equity financing.

As soon as GEB was launched, the Shenzhen Stock Exchange market hoped to establish an innovative refinancing mechanism such as the devolution of refinancing audit to improve the audit efficiency and meet the flexible funding requirements. Now the idea is supported by CSRC and will become regulation.

Multi-level capital market needs a broad base, which is the national OTC (over the counter) market (the “new three board”) as well as the regional equity market. So far, 269 companies have been listed in the new three board and the listing pace is speeding up.

Other than straighten out various trading venues, the Commission supports securities companies to provide references, equity agency trading and other services for SMEs through regional equity transfer market, Xiao said.

At present, securities firms such as CITIC securities, Guoxin securities and Zheshang securities are involved in equity transfer market building in Shenzhen and Zhejiang. Some local equity markets not only have helped a number of SMEs to achieve standardization and liquidity of equity but also achieve financing through targeted financing, private debts and equity loans.

In addition to standardized equity financing, the Commission also encourages securities companies and funding companies to develop non-standardized OTC financial instruments, as well as asset securitization and other innovative services to meet corporate financial needs.

For example, Orient Securities has helped small loan business of Alibaba Group secure the securitization of credit assets and listing on the Shenzhen Stock Exchange.