Sept. 8 – The China Securities Regulatory Commission (CSRC) is set to issue a draft regulation that will give shareholders the option to issue exchangeable bonds.

If approved,the regulation will allow shareholders to issue bonds with an embedded option to exchange the bond for the stock of a company other than the issuer at least a year after the issuance.

The bonds should ease oversupply in the stock market and provide a new way to raise funds. It should also decrease heavy selling that has only served to worsen liquidity strains in the country’s stock market.

The Shanghai index has been one of the worst performing markets in the world this year. The market has plunged by more than 58 percent and more than 63 percent from its October peak.

The draft regulation will be open for public comment here on Sept. 12.