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TMTPOST--The Nasdaq Stock Exchange has increased its scrutiny of small and medium-sized Chinese companies seeking to list on the exchange, leading to uncertainty and delays, according to sources familiar with the matter.

Some investment bankers, lawyers, and professional service firms have noted that Nasdaq, a technology-focused exchange, has been questioning the identity and background of investors in Chinese companies before they proceed with IPOs. This move can extend the listing process by several weeks or even months.

According to informed sources, the stricter vetting process is intended to protect investors from potential post-listing volatility.

Specifically, Nasdaq requires Chinese companies to provide documentation of IPO share purchasers to ensure that the majority of them are U.S. citizens.

Additionally, a lawyer mentioned that the extra due diligence includes requiring the lead underwriter to be a member of Nasdaq.

Another lawyer noted that for Chinese companies to be approved to list on Nasdaq, 80% of IPO buyers must be U.S. citizens.

An industry insider added that recent concerns stem from so-called “pump-and-dump” schemes by foreign investors in smaller Chinese stocks, which have been a significant cause of market volatility.

Nasdaq declined to comment on the matter.

As of June 30, there were 77 new listings on the U.S. stock market, raising a total of approximately $16.2 billion. Of them, 29 companies were Chinese ones, accounting for about 38% of the total new listings, with both the number and the amount of funds raised far exceeding the same period last year.

In particular, Amer Sports raised about $1.365 billion, accounting for 70% of the total funds raised in the first half of the year.

The average amount of funds raised by Chinese IPOs is relatively low, with an average of $81 million. Of these, 19 companies raised less than $10 million, accounting for a high 79% of the total listed Chinese firms. Three companies raised only $5 million each, while only Amer Sports and Zeekr Auto raised over $100 million.

Among the newly listed Chinese companies, the technology, media, and telecom sector leads with a 33% share, followed by manufacturing at 32%, consumer services at 25%, and both the financial and education sectors at 5%.