Will be geared toward innovation-oriented SMEs and largely adopt the rules of the National Equities Exchange and Quotation board

In a speech given online for the opening of the China International Fair for Trade in Services (CIFTIS) on September 2, Chinese President Xi Jinping announced the creation of a new stock exchange in Beijing for small and medium-sized enterprises (SMEs). The new board will focus on innovation-oriented companies as a way of boosting strategic emerging and high-tech industries, and to provide a much-needed injection of capital for SMEs. 

In the speech, Xi Jinping also stated that the city would reform the “New Third Board”, referring to the National Equities Exchange and Quotation (NEEQ) board, an existing stock trading system in Beijing that lists cheaper stocks of smaller companies. 

The NEEQ is the sole shareholder of the Beijing stock exchange and the Party Secretary of the NEEQ Xu Ming has also been appointed as the legal representative and chairman of the Beijing stock exchange. 

The launch date of the Beijing stock exchange is yet to be announced. 

What is the NEEQ and what is its relationship to the Beijing stock exchange? 

The NEEQ is an exchange for over-the-counter trading of stocks in smaller "public limited companies." It is often seen as a kind of entry-level system for smaller companies to raise capital before being able to raise enough capital to list on China’s two main stock exchanges or overseas. It is also the only company-run stock exchange in China, operated by the National Equities Exchange and Quotation Co. Ltd. 

The NEEQ has a 100 percent stake in the Beijing stock exchange, which will be based on the NEEQ Select Board. The Select Board is the NEEQ’s highest level board dedicated to innovation-oriented SMEs that meet certain market capitalization requirements and have been listed on the NEEQ for at least a year.