Most Chinese stock investors would be allowed to trade on the Growth Enterprise Market (GEM), and there will be no minimum capital requirement for GEM investors, according to a draft rule on investor criteria released by the regulator on Monday.

China is one more step closer to the launch of the long-awaited GEM, a board intended to nurture innovation-driven start-ups as the government tries to help smaller companies get financing and encourage technological advances.

The China Securities Regulatory Commission (CSRC) said in an online statement that all individual investors that had no less than two years of experience in stock trading in China could apply to trade on the GEM, the country's first Nasdaq-style stock market.

Counting of such experience would start from the day when the investor made his or her first trading either in Shanghai or Shenzhen.

The majority of current investors registered on either exchange fall in that category, according to the commission.

China had 108.6 million holders of valid stock accounts, including yuan-denominated A-share and foreign currency-denominated B-share accounts, as of May 22, according to the latest figure provided by the China Securities Depository and Clearing Corporation.

Foreigners are not allowed to open A-share accounts on the mainland, but they could indirectly trade yuan-denominated A-share stocks via QFII funds that purchase such stocks.

Investors who apply to trade on the GEM would have to sign on a document stating the investment risks on the GEM, which would be presented by staff with securities firms when investors filed their applications.

Those who have less than two years of trading experiences are also allowed to apply to trade on the GEM, but will go through stricter training on risks.

An unidentified CSRC official said such criteria was not to bar any particular investor from the GEM, but aimed to help investors better understand risks and urge caution in decision making so as to protect the investors.

The draft rule is released to solicit public opinion over the next 15 days, and the final version will be unveiled within a month from that date.

China has not yet announced the specific timetable for the launch of the GEM.

The commission said investors would be allowed to make applications for trading on the GEM ahead of the launch of the growth board.

According to listing rules that will take effect from July 1 this year, firms planning to list on the GEM would face strict rules, such as stricter delisting rules and rigorous information disclosure rules.

(Xinhua News Agency June 9, 2009)