(Yicai Global) Sept. 3 -- Chinese President Xi Jinping has unveiled plans to set up a new stock exchange in Beijing for innovative small and medium-sized firms. It will be the third bourse in the Chinese mainland.

Xi made the announcement late yesterday at the opening of the China International Fair for Trade in Services.

The China Securities Regulatory Commission, which will set up the Beijing Stock Exchange, said in a statement posted on its website that the new bourse is essential to furthering China’s financial supply-side reforms and improving the multi-tier capital market system.

The mainland’s two existing stock markets are in Shanghai and Shenzhen, whose Star and ChiNext boards already help Chinese science and technology SMEs go public.

It is very important to bring the capital market into better play, promote the integration of technology and capital, and support SMEs’ innovative development, the CSRC said, adding that SMEs play a vital role in driving economic growth, technological innovation and jobs creation.

The CSRC will set up the BSE based on the Select tier scheme of the National Equities Exchange and Quotations, Beijing’s over-the-counter market, to boost the ability of stock exchanges to help innovative SMEs, so as to become a major venue for such businesses, the CSRC said.

Set up in 2013, the NEEQ is a national equity trading platform which provides non-listed micro firms and SMEs with services for public transfer and financing, as well as mergers and acquisitions. It had 7,304 companies as of yesterday, divided into three tiers: Select, Innovation and Base. The Select tier has 66 firms, while the Innovation and Base tiers have 1,250 and 5,988, respectively.

Select tier firms are better quality and are expected to be the first to list on the BSE, and will be followed by those in the Innovation tier that meet the requirements, the CSRC said. The NEEQ will keep a Progressive tier scheme and will also experiment with a registration-based initial public offering system.

Editor: Futura Costaglione