Shanghai Stock Exchange Take Measures To Cement Investor Protection

With a view to implementing the requirements of Chairman Guo Shuqing for taking investor protection as the central task of regulatory work and striving to improve the market environment and the investment culture, the Shanghai Stock Exchange (SSE) has targeted at enhancing investors' abilities in rational investment and improving the quality of the blue chip market in a bid to further strengthen the service-oriented awareness, deepen the investor education, propel the construction of the blue chip market, toughen the regulation on the market and open up a new landscape for the investor protection.

First of all, the SSE has launched a series of publicity activities particularly for the guidance for rational investment to enhance investors' abilities in rational investment.

From this February, the SSE, by giving full play to the function of self-regulation and the advantage in publicity channels, has launched a series of activities for publicizing the protection of investors themed the guidance for rational investment within three months. Firstly, it organized scores of feature articles and research reports on investor education on relevant securities newspapers concerning the "four speculations" (speculation on new shares, small-cap stocks, bad-performed shares and short-term investment), the dividend distribution of listed companies, the reform in delisting system and other hot topics. Secondly, it continuously upgraded ways of publicity, such as shooting public benefit advertisements for investor protection, broadcasting special programs on TV and setting up QQ groups for contact persons of member units for investor education, in a bid to expand the channels for publicizing rational investment. Thirdly, it conducted the theme activities like the "Talkfest Held on February 8 for Small, Medium-sized Investors" and the "Appraisal on March 15 Excellent Cases of Investor Education" by focusing on rational investment and value investing. Fourthly, it cooperated with the local securities regulatory bureaus in organizing the special training of guidance for rational investment for contact persons, trainers and heads of business departments from member units for investor education. Meanwhile, it required all the companies to conduct no less than 3 internal trainings with each for no less than 50 people in the internal organizations to give full play the major role of member units in guiding rational investment.

Besides, the SSE has organized the IPO simulated price inquiry for small and medium-sized investors so as to promote the investors to study and know more about new shares.

In order to propel small and medium-sized investors to learn about new shares and guide rational investment, and meanwhile respond to a new round of reform in the issuance system, the SSE recently organized the pilot prize competitions of IPO simulated price inquiry for 2000 small and medium-sized investors recommended by 20 member units. So far, the simulated price inquiries of Beijing Cuiwei Tower Co., Ltd., ZheJiang AoKang Shoes Co., Ltd. and Sichuan Star Cable Co., Ltd. have been rounded off, with the rates of investors' participation being 90.30%, 86.55% and 94.1% respectively. According to an SSE official, the activities highlighted the direction for small and medium-sized investors to rationally participate in the investment in new shares. Firstly, the SSE has formulated the scheme for price inquiry activity through earnest research, implementing investor education in major sections of scheme design. Secondly, it has organized securities companies to guide investors for serious study on new shares and rational participation in price inquiries for new shares. Thirdly, the SSE has organized the shooting of training-related videos such as the "Interpretation on Rules and Procedures of IPO Simulated Price Inquiry" and the "Interpretation on Platform-based Operational businesses", so as to help securities companies and investors understand the rules and procedures. Fourthly, the SSE has organized some investors to attend the promotion meetings for IPO road shows and held the lectures on industry analysis of new shares, with an aim of helping investors better understand the issuance and pricing procedures for new shares and the cautions for investment in new shares. Fifthly, the SSE has solicited opinions from the market in time, summed up the experience and optimized the procedures.

Moreover, the supervision on the trading at the preliminary stage of new shares listing has been cemented against the speculation on new shares.

Concerning the currently prevailing problems including the speculation on new shares conducted by small and medium-sized investors in a blind approach, the SSE further supervised the trading at the preliminary stage of new shares listing. At the end of February, the SSE, in response 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, adopted relevant measures in time by imposing warnings on a batch of accounts speculating on the new shares. Besides, the SSE imposed the disciplinary punishment of 3-month trading restrictions on the two accounts seriously violating relevant regulations. On March 8, the "Notice of Strengthening Trading Supervision at Preliminary Stage of New Shares Listing" (the "Notice" for short) was released to specify thoughts and focuses on the supervision on the trading at the preliminary stage of new shares listing in the future as well as adjust and perfect the types of relevant abnormal trading behaviors and regulatory measures. According to sources, the SSE, in a notice issued by it, also required its member units to publicize the "Notice", deepen the understanding of investors on the hazards of speculation on new shares and guide the rational and standardized trading of new shares.

In addition, the suitability management system has been implemented in an all-round approach to urge its member units to guard the market entry.

At the beginning of this February, according to the development thought of "unified market-entry conditions, information disclosure, credit assessment requirements, investor suitability system and arrangements for investor protection" put forward for the bond market, the SSE formulated and issued the "SSE Provisional Measures on Investor Suitability Management in Bond Market" and the "SSE Guidance of Investor Suitability Management in Bond Market". According to an SSE official, the above regulatory documents specified the basic requirements and detailed standards for the classified management and suitability assessment of the investors in the bond market, and guided relevant work of securities companies, in a bid to ensure the solid implementation of the suitability management system in the bond market and the stable operation of the market. Furthermore, the SSE conducted a systematical sorting of the categories of investors and products and studied on the establishment of the systems of product risk alert, product classification, market-entry for investors and investors' classified management in the process of innovation.

Finally, the construction of the blue chip market has been boosted to better reward investors.

The SSE has boosted the construction of the blue chip market in order to better reward investors and enhance the appeal of the blue chip market. Firstly, relevant research and publicity on the construction of the blue chip market were intensified by holding the symposium on "value investing and construction of blue chip market", and organizing the compilation of articles on the blue chip's investment value as well as conducting the construction of the multi-tiered blue chip market and studying subjects such as long-term investors' participation in the market with relevant institutions, with an aim of providing supports for the development of the multi-tiered blue chip market. Secondly, the blue chip market index system and products have been perfected as well. The SSE launched SSE 100 and 150 Indices recently after SSE 50, 180 and 380 Indices. Moreover, the SSE will launch SSE Select Industries Indices, SSE Leading Consumption and Services Index and SSE Banks Index. Remarkably, the ETF products of core indices have been actively developed by the SSE. Huatai-Pinebridge SHSE-SZSE300 ETF, the first cross-market ETF, has been smoothly issued recently. Thirdly, the SSE spared no efforts to enhance the market quality and better reward investors by coordinating with, participating in and implementing systematical reforms related to the new share issuance, dividend distribution, delisting and trading-charge cut.