Shanghai Stock Exchange limits trading of some accounts for new share speculation

Shanghai Stock Exchange limits trading of some accounts for new share speculation

29/02/2012

In the recent active secondary market, the speculation on the newly issued shares re-gained its momentum, leading to the abnormal fluctuation of the prices of the new shares issued by Universal Scientific Industrial Co., Ltd. and Jishi Media Co., Ltd. at the beginning of listing. To prevent the risks of speculation on new shares in the market, the SSE strengthens the regulation and supervision on the trading of newly listed shares.

The SSE has imposed oral or written warnings on the accounts involving the new share speculation as soon as it found their rule-breaking behaviors. It has timely imposed the disciplinary punishment of 3-month trading restrictions on the two accounts with their owners respectively surnamed Huang and Su who seriously violated the regulations and refused to take advice.

The SSE has recently conducted a special study on the new share speculation in the present period. Based on current prevention measures, it will strengthen the measures on regulating the whole process of the new share speculation, and also intensify the regulation on the trading of new shares.

First, in terms of the precaution against the new share speculation, the SSE will inform relevant members of the accounts frequently involving the new share speculation and require them to prevent the accounts from speculating the new shares by giving the clients risk alerts and instructions before the new shares are listed. Second, as for the intervention, the SSE will, according to the specific situations, adopt the trading limits to the accounts which make orders at high prices to drive up the opening prices in the call auction on the first day when the new shares are listed and the accounts which conduct abnormal trading behaviors like making orders in a large sum, at high prices or conducting frequent false orders and withdrawals of orders in the consecutive auction. It will report to the China Securities Regulatory Commission (CSRC) for punishment on the accounts with serious rule-breaking behaviors. As for the aftermath measures, the SSE will have interviews with or send notices of criticism to the members who do too little to monitor the accounts speculating on new shares. It will impose trading restrictions for several days on the accounts frequently involving the new share speculation and refusing to correct their rule-breaking behaviors within certain period and report them to the CSRC for punishment.

Meanwhile, the SSE will study more strict measures to further regulate the trading behaviors at the preliminary stage of the new share listing. It will tighten the punishment on the accounts frequently speculating new shares.

The SSE suggests that the small and medium-sized investors should have a clear understanding of the nature and harm of the new share speculation and never blindly follow suit to avoid unnecessary losses.

The SSE stresses that under the new circumstance of the severe speculation on new shares in the current market, the members should actively and earnestly coordinate with the regulation on the new share speculation and spare no efforts to crack down on the bad practices, in a bid to ensure a favorable trading environment and promote the sound development of the market.