- Introducing functions of public offering and allotment
- Bringing in trading methods including negotiation, inquiry and bidding
- Implementing qualification management and admittance system and beginning to accept qualification applications of eligible investors
The Shanghai Stock Exchange (SSE) issued and implemented "Guidelines for Special Floor Business on Block Trading System (Trial)" today to conduct special floor business on its block trading system. Thus, the SSE officially introduces functions of public offering and allotment as well as trading methods including negotiation, inquiry and bidding. According to the analysts, as an efficient expansion of market functions, the special floor business provides a more flexible trading method and more efficient price range for shareholding lessening of non-tradable stocks, transfer of block shares, and shares issuance and allotment.
The special floor business on the block trading system refers to: the business in which shareholders with sell order or share-buyers with buy order can entrust the SSE members to provide relevant services of public offering, allotment and purchase; after the members submit applications to the SSE, the SSE will organize special floor, with relevant members and eligible investors as participants. Transactions will be conducted by ways of negotiation, inquiry and bidding through the block trading system and be settled by depository and clearing corporation.
According the Guidelines, special floor business adopts qualification management and admittance system. Members with securities brokerage business qualifications can provide intermediary service of the block trading system for eligible investors and other investors; members with securities underwriting business qualifications can provide promoters of purchase and sale of block shares with such services as allotment and public offerings. Members with proprietary business and client asset management business qualifications and eligible investors can directly participate in the special floor business, while other investors should entrust members with trading. By members' recommendation and upon exchanges' approval, insurance companies, insurance assets management companies, trust and investment companies, management institutions of social security fund, enterprise annuity and pension fund, qualified foreign institutional investors, finance companies, state-owned assets operation institutions or authorized institutions, investment companies and assets management companies can obtain the qualifications for eligible investors.
Eligible investors can directly participate in the on-floor trading and obtain the transfer intent information of the special floor business, negotiating the transfer price, amount, the proportion of trading commission and payment methods with intermediaries of promoters. It is learnt that the SSE will accept the applications for eligible investors' qualification since today.
The Guidelines stipulate the procedures of special floor business. First of all, upon entrusted intermediaries' application for special floor business to the exchange, the exchange will conduct a formal examination on whether the shares are legally transferable and stainless. It must be emphasized that, the ready-to-be-transferred shares should not be the stock shares with terminated sales limit transferred by the controlling shareholder of a listed company within 30 days before the company's annual report and semi-annual report are announced; the shares seller and the shares receiver should abide by relevant rules of purchasing listed companies if the shares seller is no longer the listed company's controlling shareholder due to the shares transfer. The trading procedures of special floor business include: inquiry, bidding, allotment, bid-winning, trading confirmation, and delivery.
After the block trading on every trading day, as to stock and fund block trading, the exchanges will announce the securities name, trading price, trading volume, and the name of promoter's intermediary.
If the buyers are common investors who entrust members with trading, the business departments' names of the entrusted members should be published. If the buyers are eligible investors, the names should be published as "exclusive for institutions". The block trading is not accounted into calculation of the real time market data and index, and the trading volume will be accounted into the securities' total trading volume after the block trading.
The "Guidelines" regulate the information disclosure of trading parties in the special floor business. The seller who lessens holding of 5% shares should announce within three trading days and should not trade within two days after the announcement; the major shareholder (who holds more than 5% shares) who holds less than 5% shares due to the shareholding lessening should make an announcement within two trading days; if shareholding lessening by the controlling shareholder leads to the change of controlling shareholder or actual controller, the equity change report should be announced; shareholders holding more than 5% of the company's shares which have gone through equity division reform should announce on the occasion of increasing or decreasing holding of 1% shares. Those buyers who possess 5% of the listed company's issued shares should announce (the equity change report) within three trading days and should not purchase or sell shares of the very company; those purchasers who possess 5% of the listed company's issued shares should announce within three trading days on the occasion of increasing or decreasing holding of 5% shares, and should not trade within two days after the announcement; those purchasers who possess 30% of the listed company's issued shares should conduct a tender offer while increasing holding of shares continuously.
The Guidelines also define disposal of defaulters in the special floor business. The disposal of eligible investors' default include: paying full margin in advance when participating in special floor business of the block trading system; limiting the maximum scale of participating in special floor business of the block trading system; publicly criticizing; suspending the qualification for participating in special floor business of the block trading system; canceling the qualifications of eligible investors. As to an inquiree, it is suggested that the Securities Association of China should deprive the inquiree of its qualification. Disposal of members' default include: publicly criticizing; revoking the qualification for intermediary business. As to an SSE member, it is suggested that the CSRC should decreases the member's classification grade.