SHANGHAI (Reuters), – Chinese regulators have urged Chinese subwriters to set reasonable prices for initial public offerings after a third, out of over 100, fell during their trading debut.

According to a spokesperson, the Shanghai Stock Exchange had a meeting with underwriting banks and asked them to determine prudently the IPO price.

According to a spokesperson, the stock exchange may also use the performance of new shares in order to assess if a bank is underwriting well.

Chinese IPOs can be underwritten mainly by Chinese banks and some joint ventures between foreign banks.

China launched a U.S.-inspired IPO system three years ago when Shanghai’s tech-focused STAR Market was established. Later, the reform was extended to ChiNext’s start up board in Shenzhen.

Most new listings this year that dropped below their IPO pricing are being traded on STAR/ChiNext. This reflects bearish investor sentiment as well as poor pricing skills from Chinese underwriters.

Vanchip Tianjin Technology Co, a chipmaker, plunged 36% in its first trading day, and Rigol Technologies fell 35%.

Almost all IPOs had been subject to a price cap imposed earlier by regulators. This ceiling tended to guarantee new floats a substantial 44% increase on their debut.

Chinese bankers will, just like Western counterparts, set IPO prices to reflect a company’s potential growth and risks as well as market sentiment and the expectations of issuers.

Vice chairman of China’s Securities Watchdog Fang Xinghai stated at last week’s Boao Asia Forum that Chinese underwriters must improve their IPO pricing abilities and foreign competition is a good idea.

Teren Lin of boutique investment bank TRSD capital, stated that it is a common phenomenon for stocks to fall below IPO prices in mature market countries like New York or Hong Kong. He also said that China’s market has shown signs of becoming more market-oriented.

A STAR Market underwriter said that “old habits” contributed to the high price of real estate. He declined to identify himself.

He stated, “But most importantly, we are in a bear markets,” and referred to many stock’s poor start performance.

Nearly one-fifth of the benchmark’s value has fallen this year. The STAR Market slumped by 37%

Shanghai Securities News reported for the first time about the Shanghai Stock Exchange meeting.