| Currently, the SMEs in China are still small in their size, but are the most vigorous sector in the whole economy with the largest potential, which provides over 70% of the employment. The opening of Growth Enterprise Board (GEB) in China has always been on the top list of Chinese legislators, as it will contribute to the financing channel of SMEs,improve their management model, and enhance their growth sustainability. However, the establishment of GEB can be completed overnight, especially to a country in its transition and with fairly weak economic foundation. Therefore,it is necessary to take full consideration on the social awareness of good-faith, sophistication of investors, as well as market capacity. By learning from decades of lessons and experience of the western market, we are able to gradually establish and streamline a GEB market and relevant laws and regulations which suit the Chinese characteristics.On the basis of the above analysis and thoughts, the author, through research and study, utilize the comparative method to take an one-on-one comparison between US Nasdaq and German Neuer market, then use the findings to study regulations and issues of the newly-launched China Nasdaq, and finally raise some suggestions to improve the Chinese regulations on GEB market, so as to make contribution to the healthy and sustainable development of the market. Through such a writing framework, the author breaks the paper into five chapters apart from the introduction.Chapter 1 analyzes the fundamental character of GEB market. In the beginning it discusses by theory on the definition, background of initiation, and different features during the four stages of market development, i.e.,take-off, prosperity, adjustment and recovery. Then, the paper elaborates on the functions of GEB, namely, financing platform for enterprises, exit route for venture capital, method to improve corporate governance, and adjustment mechanism for security market. On such basis, the author further focus on analyzing the importance of the GEB launch upon SMEs and the sophistication of capital market system. Finally, through a helicopter view on the future of GEB an its high-risk profile, it helps to raise public awareness that it is possible to ensure a long-term stable development of GEB only by building a comprehensive set of regulations concerned.Chapter 2 and Chapter 3 deal respectively with the essential legal system of US Nasdaq and German Neuer market. The reason to choose these two as research target is that US demonstrates the most successful GEB market while Germany as the well-known failing example. These two chapters use the method of parallel narration to respectively introduce several key regulations of both markets, including approval, IPO standard, trading, supervision, disclosing, exit and board switching mechanisms, so as to allow readers have a more direct insight on the legal system of both markets.Chapter 4 compares between US and Germany GEB system and draws some inspirations from it. This chapter is the cornerstone of the paper, which step-by-step compares the legal system of the two markets, highlighting their commonality and differences, making theoretical analysis, and coming to conclusion on the reason why Nasdaq thrives and Neuer fails.The following inspirations can be drawn:IPO standards shall meet with characters of the enterprises which GEB is designed to serve;registration scheme does not mean loose regulation; a sound trading mechanism is a must for the healthy development of GEB;the value of regulation is on the stringent execution; exit mechanism is the quality assurance for GEB market.Chapter 5 comments on the basic legal system of Chinese GEB and discusses ways of improvement, which serves as keynote of the paper. First, it briefly reviews the process of Chinese GEB development from theoretical study to implementation; then it explains the current regulation in force and its problems; finally, the author proposes seven initiatives to improve the system:1) reduce government intervention; 2) set up a pool of independent directors organized by security association, and enhance responsibility assigning mechanism; 3) enforce a more stringent information disclosing mechanism;4) increase transparency of collective pricing and temporary drops off the market maker mechanism; 5) Strengthen supervision on GEB;6) employ the inventory stock issuance mechanism to solve the releasing problem of conditional shares.The main academic innovations of this paper are:this paper take GEB market and its legal system as research target, and employ the methodology of historical analysis and comparative analysis to provide insight to the establishment and improvement of GEB market from angels such as approval, trading, disclosing, supervision, exit and board switching mechanisms, so as to form a fairly comprehensive research framework and demonstrate some innovative thinking throughout.
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