Financial reform is never easy. That has only been made more obvious by the relaunch of IPOs.

Since the lifting of the one-year moratorium in January, about 50 companies have raised capital in the capital market through new listings. But things didn't turn out as envisaged under the new rules, which were designed by China Securities Regulatory Commission to shift the emphasis from official approval to self-regulation.

The market obviously is not ready for such drastic changes that touch on the fundamental regulatory principle.

Instead of raising new capital for business expansion, the majority of those IPO companies used their market listing as a way for the controlling shareholders to unload their holdings. The China Securities Regulatory Commission blocked the IPO of at least one company when it was made known that more than 80 percent of the shares it offered for sale were held by its major shareholders.

What's more, rampant speculation on the newly issued shares has pushed prices to unreasonable levels. All the IPO shares rose by an average of more than 40 percent on the first day of trading. Such a performance has confounded some stock analysts and confused many investors, raising widespread speculation of price manipulation.

Such irregularities have discredited the CSRC's regulatory reform efforts to bring the market rules and practices more in line with internationally accepted standards. In a micro blog, Fudan University finance professor Xie Baisan wrote that the "IPO madness" has shown that CSRC's reform is a "complete failure".

Many other market commentators share Xie's view and expressed their disappointment at the CSRC's efforts. There are growing calls for the return to the old days of authoritative control, requiring explicit permission and approval from the CSRC for specific stock transactions.

Such frustration with the new arrangement can be understood. But it ignores the fact that the old system didn't seem to work as the capital market on the mainland expanded and became increasingly more complicated. As such, it is unrealistic to expect the CSRC to continue to retain firm and direct control over every aspect of the financial market.

In most other financial markets, the watchdog agencies perform a supervisory, rather than a decision-making, role, giving the market operators, stockbrokers, investment banks, institutional investors and listed companies a free hand to operate according to a clearly defined set of rules and accepted best practices. The Chinese regulatory authorities have made the decision to adopt such a model. Doing so should allow it to concentrate its available resources on supervision, which obviously needed improving.

The much-maligned recent IPO madness should not be seen as an invalidation of the CSRC's reform efforts. It merely confirms that a lot more work needs to be done to convince market operators and corporate managements that it is in their best interests to play by the rules.

This is not going to be easy. Most market operators and corporate executives have little, or no, experience in self-discipline. Some of them obviously see the new system as an official nod to a free-for-all.

There appears to be a missing piece in the reform jigsaw puzzle. Of course, the rules are there for all to see. What is not clear is the power the CSRC has to bring rule breakers to the dock. A more important question that the authorities should ask is whether the penalties are serious enough to deter potential offenders.

Market reform deserves a chance to succeed. It will have a better chance to do so if the CSRC is empowered with the right tools and armed with sharp teeth.

The author is a senior editor with China Daily, email: jamesleung@chinadaily.com.cn