The comprehensive agreement transactions platform of the Shenzhen Stock Exchange (SZSE) is officially run today. The launch of the platform, which is based on block trading and mainly serves institutional investors, indicates that the SZSE is heading towards a multi-layered and diversified approach for its market liquidity service.
Replacing the original block trading system and incorporating the practices of overseas mature market and different settlement methods between bourses and inter-bank markets, the platform is flexible, versatile and expandable.
The platform integrates businesses mainly participated by institutional investors, including block trading for equity securities, block trading for bonds and agreement transactions for special assets management plan. The platform can cater for varied agreement transactions in accordance with different business requests.
Richer quotation methods are provided with stronger deal and search function. Major dealer system is supported by the platform. Quotation service is available for fixed-income investment tools like bonds, which strengthens the price discovery function and liquidity of bonds market in the bourse.
Furthermore, the platform expands the broadcast channel of transaction quotes, which will be disclosed in the website (www.szse.cn/main/ints) and quotes disclosure software.
A principal from the SZSE introduced that the platform, which will be regarded as the second largest system of the bourse’s centralized trading market, is a useful supplement to the bidding transactions system.
As the market is developing and more and more innovative products are rolling out, some products with high risks, such as low-grade corporate bonds and assets securitization obligation, are not suitable for direct transactions through bidding system. However, those products can be put into the platform to function as risk isolation, he said.
And there are some other products with weak liquidity and discontinued market price, such as fixed-income bonds and real estate investment trust funds, which can also be put into the platform to maintain market liquidity by offering double-way quotation service through major dealers, he added.
To attract more investors, the SZSE will exempt investors from commission for bonds trading (regulation fee not included) within one year from the day the platform is officially launched.
