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MARKETS LIVE BLOG:

STOCKS SLIDE AFTER META'S REALITY CHECK, DOWNBEAT GDP

Caterpillar sinks 7% after earnings, management sees weakness in Europe, Asia-Pacific

China regulator denies report on data strategy to avoid U.S. delistings

Reuters
Updated ·2 min read
FILE PHOTO: Chinese and U.S. flags flutter outside a company building in Shanghai

HONG KONG (Reuters) -China's securities regulator on Monday denied a media report that said Beijing planned to sort U.S.-listed Chinese companies based on the sensitivity of the data they hold in an attempt to stop U.S. regulators from delisting hundreds of firms.

The three-tier system aims to bring Chinese companies into compliance with U.S. rules that would require public companies to let regulators inspect their audit files, the Financial Times reported on Sunday, citing people with knowledge of the matter.

The China Securities Regulatory Commission (CSRC) "has not studied" a three-tier classification of companies, it said in a statement.

"Enterprises are required to comply with relevant national data information management laws, rules and regulatory requirements of the place of listing, regardless of whether they are listed domestically or overseas," the regulator said.

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Washington has long demanded complete access to the books of U.S.-listed Chinese companies, but Beijing, citing national security concerns, bars foreign inspection of working papers from local accounting firms.

More than 270 Chinese companies listed in New York have been identified as being at delisting risk under the Holding Foreign Companies Accountable Act (HFCAA) passed late last year.

The rule gives Chinese companies until early 2024 to comply with auditing requirements, though the U.S. Congress is weighing bipartisan legislation that could accelerate the deadline to 2023.

China has claimed both sides are committed to reach a deal to solve the audit dispute.

But the U.S. side has been more reserved on the outlook.

Earlier this month, Securities and Exchange Commission Chairman Gary Gensler said he was "not particularly confident" that a deal could be made, according to media reports.

In early April, China moved to resolve a dispute over cross-border audit inspections by proposing scrapping requirements that on-site inspection of overseas-listed Chinese companies be conducted mainly by Chinese regulators.

(Reporting by Martin Pollard and Xie Yu; Editing by Sumeet Chatterjee and Stephen Coates)