SEC official said on Tuesday that "significant challenges remain" in reaching an agreement with China over a long-running dispute over auditing compliance of Chinese-based companies listed on U.S. stock exchanges, reported Reuters.
What happened: YJ Fischer, the SEC's international affairs chief, mentioned that the U.S. Public Company Accounting Oversight Board (PCAOB), would need to complete China audit inspections by Nov. 22 to meet a U.S. deadline requiring non-compliant Chinese companies to delist by early 2023
Fischer further stated that Chinese authorities should consider delisting a "subset of issuers" from U.S. exchanges because they are "too sensitive to comply" with U.S. rules.
"While there has certainly been progress in the discussions on audit inspections in China and Hong Kong, significant issues remain," Fischer added.
Why It's Important: "Even if an agreement is signed between the PCAOB and Chinese authorities," she added, "it will only be a first step," since the U.S. would then need to start on-the-ground inspections.
The China Securities Regulatory Commission (CSRC) said in a statement that negotiations were progressing smoothly overall, and it was inappropriate to disclose specific issues.
"We've always maintained that the audit inspection issue should be solved by cooperation on the basis of equality. Our attitude has always been positive and constructive," the regulator stated.
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