THE Qianhai Equity Exchange, a regional over-the-counter market, began operation in Shenzhen yesterday, offering firms not listed on the major bourses a new source of financing.

With a registered capital of 555 million yuan (US$91 million), the new equity exchange provides financial services, such as shares custody, capital raising, clearance, trading and settlement, for small and medium-sized enterprises not listed on the Shenzhen and Shanghai stock exchanges.

A total of 1,200 enterprises have listed on the equity exchange.

Song Liping, general manager of the Shenzhen Stock Exchange, said the launch of the Qianhai exchange provides access to capital markets for SMEs that have long struggled to raise funds from commercial banks or do not meet requirements to list on the two stock exchanges.

Hu Jizhi, chairman of the Qianhai exchange, estimated that financing costs on the exchange are equivalent to only about one-tenth of the costs on the floor of the two main exchanges due to free registration and simplified administrative procedures.

Companies applying to list on the Qianhai exchange will be subject to a set of requirements including a net profit of not below three million yuan in the past 12 months.