On 5 September 2008, the China Securities Regulatory Commission (CSRC) published a draft regulation soliciting public comment on the rights of listed company shareholders to issue exchangeable bonds. The aim of the new regulation is to ease oversupply in the stock market that has helped to drive down share prices.

If implemented, shareholders of a listed company that possesses at least RMB300 million net assets are eligible to issue exchangeable bonds with an embedded option to exchange the bonds for the stock of a company other than the issuer. The exchangeable bonds carry a timeframe of one to six years and the price is set via inquiry launched by shareholders and underwriters. The new financing tool is aimed to ease market concerns about the release of previously locked-up shares and make it easier for shareholders to raise funds.

It was reported that the regulators will continue to adopt innovative market tools to guide large-volume selling by shareholders rather than extending lock-up periods or imposing windfall profits taxes. It was also reported that a new system of secondary offerings may be introduced to allow securities dealers to take up stocks from shareholders and hold them for a certain period, delaying the impact of the sales on the market.