CHINA: SSE to Amend Market-Closing Trading Mechanism

Wednesday August 15 2018

The Shanghai Stock Exchange (SSE) has recently adjusted their market closing trading mechanism to adopt the call auction for the 3 minute market closing. Mainly due to SSE’S desire to maintain the price stability at the market closing stage. This was approved by the China Securities Regulatory Commission (CSRC) and as a result revised the SSE’s Trading Rules. SSE accordingly reviewed the “SSE Measures for Implementation of Shanghai – Hong Kong Stock Connect Business”, the “SSE Measures for Management of Stock Trading on Risk Alert Board”, the “SSE Detailed Rules on Real-time Monitoring on Abnormal Transactions of Securities” and the “Notice on Relevant Issues of Trading Regulation at Preliminary Listing Stage of New Shares”

SSE’s revised market closing trading mechanism and adjustments will now come into effect on 20 August 2018.

Some of the main adjustments revised are as follows:
i. Adjustments on market-closing trading mechanism

– Call auction has been adopted at market closing.
– The closing price of shares trading has been adjusted to be formed through call auction at market closing.
– The call auction time of market closing is 14:57 – 15:00.
– An order is allowed during the call auction of market closing, but withdrawal of the order is banned.
– Quotation disclosure is the same with the call auction of market opening.
– The resumption time after the trading suspension of securities has been adjusted.
– When the suspension of trading lasts till 14:57 or later, the trading will resume at 14:57 and enter into the follow-up trading stage; with regard to the stipulation that “the in-session trading suspension lasts till 14:55”, it has been revised to that “the trading suspension lasts till 14:57, and the trading will resume at 14:57 and enter into the follow-up trading stage”.

ii. Adjustments to the range of valid order price on the first day of shares’ listing

– The range of order price on the first day of shares’ listing has been adjusted as follows:
– The valid order price during the continuous auction, the call auction of market closing and the trading suspension of market opening has been adjusted to “be neither higher than 144% of the issuing price nor lower than 64% of the issuing price” (The 144% and 64% is 120% of the upper limit and 80% of the lower limit respectively of the valid order price range during the call auction of market opening).
– As for the other 3 listing situations for shares, i.e., additional issuance for listing, listing resumption after listing suspension and relisting after delisting, the range of valid order price during the call auction of market opening on the first day of shares’ listing has remained the same as before, that is, “the order price shall be neither higher than 900% of the previous closing price nor lower than 50% of the previous closing price”; the follow-up valid order price range has been adjusted to “be neither higher than 110% of the latest trading price nor lower than 90% of the latest trading price”.

iii. Adjustments to issues concerning accepting orders for trading-suspended shares during market opening

– Order acceptance and order withdrawal are both permitted for trading-suspended shares during market opening. When the trading is resumed, call auction will be adopted for the accepted orders to match trading at one time.
– No adjustment has been made to relevant issues concerning accepting orders for bonds, bonds repo and funds during trading suspension.

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