Recently, an official of the Listed Company Department of the Shanghai Stock Exchange (SSE) said that the current priority work for SSE's supervision over the listed companies is to reinforce the joint regulation on stock prices' abnormal fluctuation and information disclosure. As China's securities market is entering the all-floating era, all parties pay much attention to the stock prices, which has caused more market rumors. On the one hand, the information disclosure of the listed companies will be more demanding. On the other hand, the frontline authorities' supervision over listed companies' information disclosure will face more challenges.
Statistics show that in 2006, the SSE made 434 trading suspensions on listed companies for their stock prices' abnormal fluctuation and 241 for not having announced significant events. In the second half of 2006, the SSE made emergent trading suspensions before the opening on 37 companies for media reports that need to be clarified. Moreover, the SSE Listed Company Department requested the SSE Market Surveillance Department in 2006 to investigate 50 companies whose abnormal stock prices were suspected of relating to untimely and unfair information disclosure. Besides, it issued 25 joint supervision letters to relevant securities regulatory bureaus.
According to the official, the SSE's supervisors for the listed companies, when dealing with information disclosure examination, will also pay attention to the daily stock price changes. Once the abnormal fluctuation occurs, the supervisors will call the companies' secretaries to directorate to inquire and remind them that whether there is information that should be disclosed but has not been done. If necessary (especially when there are media reports on merger, acquisition and reorganization), the supervisors will request the companies to issue letters to their controlling shareholders or actual controllers. After the companies receive the written reply, they should make relevant announcements. If the companies cannot get timely reply from their controlling shareholders or the details of the merger, acquisition and reorganization are not clear, the SSE will request the companies to apply for trading suspension due to their not having announced significant events. After they made the announcements, the trading will be resumed.
Furthermore, the supervisors will search the daily information on major financial media. If a company's information is released but not in the announcements, the SSE will decide whether it is sensitive information for stock prices. By considering such factors as whether abnormal fluctuations in the company's stock prices occurred recently, the SSE will determine whether to impose emergent suspension on the company as it needs to clarify the media reports. All this is to ensure the symmetry and fairness of the information.
To suit the growing impact of securities dealers' research reports on stock prices, the SSE will gradually establish effective communication channels with the research departments of major securities dealers to get the reports at first time. After deciding whether the fundamental research data are suspected of unfair information disclosure of listed companies, it will take regulatory measures for the next step.
As for companies that still refuse to disclose significant information after trading suspension, the SSE, to protect the interests of holders of floating shares, will disclose relevant information to the market in exchange's announcements and carry out mandatory trading resumption for the companies' stocks according to the listing rules.
The official pointed out that as investors pay more attention to the stock prices in the all-floating era, "rumors" are much easier to spread. What kind of rumors should be included in the scope of information disclosure supervision? How to decide whether it is sensitive information for stock prices? Rigid standards are hard to implement. To ensure the market fairness under the precondition of market efficiency, the solution will, to some extent, depend on the supervisors' professional judgment.
