Performance Testing On IPO Included An Allotment Options

OAO, short for over-allotment option, is an option that publishers authorize to main resellers, who over sell no more than 15% stocks of selling amount at the same publishing price, which means main resellers sell no more than 115% selling amount to investors. Since this more stocks go republic within 30 days, main resellers have the right to select from centralized price bidding market to buy publishers'stocks according to the market, or ask publishers for more stocks to allocate to investors who apply to subscribe for this OAO.OAO is a system that reduces the risks of stock publishing for resellers, expand financing amount for the publishers, and reduce the great price wave after stocks go republic for the market.This system was widely used in B shares market in our country at first. SFC issued terms in 2001 and 2006 to promote resellers and publishers using OAO when A shares published after B shares stopped to publish. But because of IPO underpricing rate obviously higher than mature capital market, resellers taked few risks when new stocks go republic, OAO was not widely used in A share market. When new shares of breaking frequently appeared in 2006, investors' confidences were seriously frustrated especially after large-cap breaking. This supporting system appeared when Industrial Bank of China used OAO for the first time.Systems of new stocks go republic was reformed in our country in 2010, in order to build fairy, effective and international publishing market, which provided the opportunity to promote OAO.This passage proves that OAO gets expected results in Hong Kong market, which publishing system is almost the same with our country, according to the affect in Hong Kong in recent 3 years, in order to show initiate for promoting OAO in our A shares market, and believes OAO would affect if used in our country. Meanwhile the passage makes policy suggestions for probably unfair and price operation when OAO is used.