Shanghai Stock Exchange tightens regulation on to-be-due warrants

Shanghai Stock Exchange tightens regulation on to-be-due warrants


The Shanghai Stock Exchange (SSE) has recently made special deployment of more regulation on speculation against such warrants as the "Tsingtao Brewery CWB1" and "Shenzhen Expressway CWB1" which will soon expire. To curb speculation, it has given warnings to the accounts with large accumulative turnover through heavy intraday trading of warrants. In addition, it has imposed warrant trading restriction on some securities accounts including those belonging to two scalpers surnamed Zheng and Guan.

More and more investors have got their confidence back in securities trading since the market was re-activated in the 2nd half of 2009. Taking advantage of the passions of the investors, especially the medium and small investors, for speculation against the to-be-due warrants, some big investors, with a large amount of idle money, speculate in the warrants for profits by misleading the investors to follow suit.

By summarizing the previous experience in warrant monitoring, the SSE has issued risk alerts to the accounts with considerable accumulative trade volume through hectic intraday trading. Meanwhile, it has imposed restriction on trading of warrants on some securities accounts with seriously abnormal transactions. Furthermore, it will enhance publicity and education for investors to remind them of the market risks.

The SSE asks the investors to invest rationally for preventing trading risks instead of blind speculation or follow-suit. Moreover, it requires its members to effectively assume the obligations of strengthening management on clients’ trading behaviors. To promote the healthy development of the securities market, they should do a better job in risk alert and rules education concerning the to-be-due warrants, collaborate with the exchange on regulation of abnormal trading, and give full play to their self-regulatory functions.