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In view of the steep swings and over-speculation of deep out-of-the-money warrants pending maturity, Shenzhen Stock Exchange, upon approval of the securities regulator, today issued a notice on further strengthening supervision of the aforesaid warrants like ZJ ZYP1 and would set a price upper limit rather than a lower limit, starting from Oct. 30.
The Notice prescribes the price upper limit of ZJ ZYP1 shall be adjusted based on its pre-closing price range: a 10% rise when its closing price stands above 0.100 yuan (inclusive); 20% when the closing price ranges between 0.010 (inclusive) and 0.100; 50% when the closing price is lower than 0.010 yuan.
The measures laid out also apply to other deep out-of-the-money warrants but specific implementation time and details will be disclosed later.
The Shenzhen bourse has imposed focused monitoring on such warrants as ZJ ZYP1, and will restrain the trading of related accounts with major trading irregularities and suspected of rule breaches and refer such cases to the top stock watchdog for further investigation.
Meanwhile, the bourse requires under this notice all its member institutions to strictly comply with relevant regulations and guidelines while conducting risk education to investors and providing risk alerts so as to enhance regulation and management of warrants trading activities.
A source with the stock exchange said such risk control measures aimed to effectively contain speculation of deep out-of-the-money warrants and better protect the legal rights and interests of investors, especially retail investors. And the bourse would continue rigorous supervision of warrants trading, implement and constantly improve the intra-trading suspension mechanism for more effective and specific risk control measures in a bid to maintain market order, according to the same source.
