OTC market firms fair well

China may soon take a major step forward to expand the country's over-the-counter (OTC) securities market, a move that experts said is a key to establish a multi-layer capital market, as companies traded in the market are believed to have entered a healthy stage of development.

Companies traded on the OTC securities market saw a surge in both revenues and profits for the first half of the year with 69 companies reporting a 75 percent increase in net profits to 359 million yuan year on year, according to the Securities Association of China.

The better-than-expected performance of OTC companies and the rapid growth of the OTC market have prompted the country's securities regulator to mull gradually expanding the pilot program of the OTC trading system to more cities across the country.

Shanghai and Wuhan, the capital of Hubei province are expected to launch an OTC trading system soon and detailed regulations may be revealed as early as October, according to Chinese media reports.

China established the first OTC stock trading pilot program in Beijing's Zhongguancun Science Park in 2006, known as the Zhongguancun Stocks Quotation and Transfer System.

Similar to the Over-the-Counter Bulletin Board (OTCBB) in the United States, the trading system provides an electronic financing platform for non-listed start-up companies to raise funds. By far there are 70 high-tech start-up companies traded in China's OTC market.