Shanghai Stock Exchange To Curb Speculation Through New Procedures And Surveillance System

In its research report "Four Categories of Speculation: The Reasons for Long-term Market Downturn and Investors' Loss" published today, the Shanghai Stock Exchange (SSE) gave an in-depth analysis on the reasons for the prevailing of four kinds of speculation, namely, new shares speculation, small-cap stocks speculation, underperformed stocks speculation and frequent trading, on China's capital market before proposing to crack down on speculation with both technique and system.

On the technical level, the SSE will beef up market supervision by, according to actual conditions, imposing trading limits on the accounts with such abnormal trading behaviors as making orders in a large sum or at high prices, or conducting frequent false orders and withdrawals. For the accounts frequently involving scalping and refusing to correct their rule-breaking behaviors within a certain period, the SSE will identify them as unqualified investors, impose trading restrictions for several days on them and file with the China Securities Regulatory Commission for punishment, with an aim to more accurately and effectively crack down on these rule-breaking behaviors.

On the system level, firstly, it is needed to further the education and risk alert for investors. Secondly, efforts should be made to actively and smoothly promote the IPO system reform and free the issuance pace, in a bid to realize the coordinated and sound development of the primary and secondary markets. Thirdly, with an aim of eliminating theme-related speculation against listed companies' fundamentals, it is a must to restrict the conducts of bonus shares or capitalized shares by listed companies characterized by large amounts and high proportions. Fourthly, more effects should be made to perfect and strictly implement the delisting system to curb speculation on underperformed companies. Fifthly, it is required to guide listed companies to establish persistent, clear and transparent cash dividend policies and decision-making mechanisms, in addition to strengthening supervision and restriction on the companies failing to distribute dividend according to promised proportions or failing to fulfill the dividend distribution obligation for a long time. In the final place, more institutional investors should be cultivated to give further play of their roles in the guidance and demonstration of value-oriented investment.