While nobody questions the intent of the CSRC's initiatives, some analysts have raised concerns that the market practitioners, including stockbrokers, investment advisors, corporate executives and professional service providers, may not be ready for the new ways of doing business. They are used to the old system under which pricing and other key elements of a transaction were pretty much dictated by the authorities rather than determined by the market.

The Aosaikang debacle showed up the inadequacies of, among other things, the market pricing mechanism. The failure of the company's management and its advisors to identify the discrepancy and take the necessary steps of redress it has also drawn much criticism from investors.

The market mechanism obviously failed its first test under the new regulatory regime. The CSRC has taken the right step in calling a halt to further IPOs, at least for now. It should take time to work with the various market operators to clarify the responsibilities and obligations of every party in an IPO transaction and ensure that the system can work properly before subjecting it to further tests.

The cost of failure in experimenting with financial reform is hard to predict and contain because so much money is involved in one single throw.

The author is a senior editor with China Daily. jamesleung@chinadaily.com.cn

(China Daily 01/20/2014 page8)