In order to strengthen the regulation on the trading at the preliminary stage (the first 10 trading days after listing) of the listing of IPO-related shares (hereinafter referred to as the “new shares”), prevent and control the speculation on new shares, safeguard the normal trading order, and protect investors’ legal rights and interests, the Shanghai Stock Exchange (SSE) hereby notifies, in accordance with the “Trading Rules of the SSE” and other relevant regulations, the relevant matters of strengthening regulation on the trading at the preliminary stage of new shares listing as follows:
1. The effective order price of any investors on the first day of new shares listing should meet the following requirements, and any order with its price exceeding the range of the effective order price will be regarded as invalid:
(1) The effective order price during call auction should neither be 120% higher nor 80% lower than the issue price;
(2) The effective order price during consecutive auction should neither be 144% higher nor 64% lower than the issue price.
And the effective order price from 14:55 to 15:00 should neither be 120% higher nor 80% lower than the opening price of that day.
If no opening price appears during call auction, the first trading price of that day will be regarded as the opening price.
2. The SSE has the right to impose the in-session temporary trading suspension on any new share which has one of the following abnormal fluctuations during the consecutive auction stage on the first day of listing:
(1) The in-session trading price is over 10% (10% included) higher or lower than the intraday opening price for the first time;
(2) The in-session trading price is over 20% (20% included) higher or lower than the intraday opening price;
For any new shares whose trading is suspended due to the Clause (1), trading of the new shares should be suspended for only once on the same day with the duration of 30 minutes. If the time for trading suspension last till or past 14:55, the trading of the new shares should be resumed at 14:55 on the same day. For any new shares whose trading is suspended due to the Clauses (2), the trading of the shares should be suspended till 14:55 on the same day.
After imposing in-session temporary trading suspension, the SSE has the right to announce the specific time for trading suspension and resumption through the official website of the SSE (www.sse.com.cn) and the satellite transmission system.
3. The SSE has the right to strengthen the monitoring on the following abnormal trading behaviors occurring at the preliminary stage of new shares listing:
(1) The same securities account or the multiple securities accounts controlled by the same controller accumulatively buy over 1‰ of the actual number of the new shares on a single day through bidding;
(2) The same securities account or the multiple securities accounts controlled by the same controller conduct intraday offsetting trading or frequent offsetting trading every other day in a large amount.
(3) During the stage of call auction or in 15 minutes before closing, the account has a severe impact on the opening or closing prices of new shares through high-priced orders, large-volume orders, continuous orders, frequent orders, withdrawal of orders, and other ways;
(4) During the stage of consecutive auction, when the latest trading price approximates the intraday highest trading price, the account accumulatively buys over 0.2‰ of the actual number of new shares upon making an order at the price no less than the lowest real-time purchase price disclosed on the market;
(5) The account buys a large amount of new shares at the price of 2% higher than the latest trading price disclosed on the market before the order is made;
(6) The account has a severe impact on the trading prices of new shares by making market orders in a large sum upon entrustment;
(7) The account conducts other abnormal trading behaviors of new shares the SSE regards necessary to be monitored in a strict way.
4. The SSE has the right to adjust the range of the effective order price and the standards for abnormal fluctuations and abnormal trading activities stipulated in this notice according to the market needs.
5. The SSE has the right to apply one or more of the following regulation measures to the securities account conducting the above-mentioned abnormal trading behaviors:
(1) Oral or written warnings;
(2) Requiring submitting a commitment letter of compliance trading;
(3) In-session trading suspension of the account on the very day;
(4) Identifying the account owner to be an unqualified investor and restricting his/her participation for a certain time in the trading at the preliminary stage of the listing of new shares.
The SSE will limit the trading of the account with serious rule-breaking activities and record it into the credit archives; and the SSE will report the account suspected of being involved in law-breaking activities to the China Securities Regulatory Commission for investigation.
6. The SSE will publicize the trading information of all types of investors engaging in the trading after the closing on the first day of new shares listing, and all market participants can log on the official website of the SSE to look for these information in the “Trading Information on the 1st Day of New Shares Listing” under the column “Trading Information Disclosure”.
7. The SSE members should well publicize this notice and inform their clients of the risks of new shares trading. They should also reinforce the management on clients’ trading behaviors at the preliminary stage of new shares listing. If the members find that their clients have one of the above-mentioned abnormal trading behaviors, they should warn the clients of the abnormal trading behaviors and timely take measures to stop them.
The members should refuse to accept the trading entrustment of the clients who conduct serious abnormal trading behaviors and keep doing them upon warning, or terminate the securities trading commission-agency relationship with customers and report them to the SSE according to relevant regulations of the “Detailed Rules on SSE Members’ Management of Clients’ Securities Trading”.
8. The SSE members should coordinate with the SSE to conduct cooperative regulation on the new shares trading and take measures to standardize and restrict the new shares trading behaviors of the accounts under strict surveillance in the new shares trading.
Headquarters of member units should designate persons responsible for the regulation on new shares trading, and persons-in-charge of securities business departments should directly take charge of the cooperative regulation on new shares trading in their business departments.
9. The SSE will carry out special inspections on members’ implementation of this notice. For those who do not implement this notice effectively, the SSE will adopt the following regulatory measures:
(1) For any member with two clients being restricted by the SSE due to abnormal trading behaviors of new shares in one year, the SSE will interview its executive;
(2) For any member with more than three clients (three included) being restricted by the SSE due to abnormal trading behaviors of new shares in one year, the SSE will issue a letter of regulatory concern to it according to actual conditions;
(3) For any member with more than five clients (five included) being restricted by the SSE due to abnormal trading behaviors of new shares in one year, the SSE will issue a criticism notice among all members according to actual conditions.
10. Professional institutional investors engaged in fund, insurance, and securities should actively cooperate in the implementation of this notice, insist on the principles of self-discipline and compliance, enhance the concept of value investing, and rationally participate in trading of new shares.
11. Other issues related to the regulation on the trading at the preliminary stage of new shares listing are subject to the “SSE Guidance for Real-time Supervision on Abnormal Securities Trading” and other business rules.
Relevant stipulations in the SSE’s relevant business rules which have discrepancies with those in this notice are pursuant to this notice.
12. This notice shall come into effect from the promulgation day. The “Notice of Toughening Supervision on Trading at Preliminary Stage of New Shares Listing” (Shang Zheng Jian Zi [2012] No. 4 Document) and the “Notice of Strengthening Supervision on Clients’ Trading Behaviors at Preliminary Stage of New Shares Listing” (Shang Zheng Jian Zi [2012] No. 5 Document) released by the SSE on March 8, 2012 shall be abolished at the same time.