On June 17, the Shanghai and Shenzhen Stock Exchanges respectively issued the Detailed Rules for the Trading of Convertible Corporate Bonds of the Shanghai Stock Exchange (Draft for Comment) and the Detailed Rules for the Trading of Convertible Corporate Bonds of the Shenzhen Stock Exchange (Draft for Comment) (hereinafter collectively referred to as the “Detailed Rules for the Trading of Convertible Corporate Bonds of the Shenzhen Stock Exchange (Draft for Comment)”. “Transaction Rules”) and solicit opinions from the market, and at the same time issue the “Notice on Matters Related to the Suitability Management of Convertible Corporate Bonds” (hereinafter referred to as the “Suitability Notice”), which will be implemented from June 18.
The “Trading Rules” will introduce an investor suitability system, set relatively wide limits on price fluctuations, and adjust the scope of intraday price declarations. 100,000 yuan in assets” access requirements.
Tian Lihui, dean of Nankai University’s Financial Development Research Institute, said in an interview with a reporter from Securities Daily that recently, some hyped funds have entered the convertible bond market, causing some convertible bonds to fluctuate significantly. The optimization of the trading rules of the convertible bond market by the Shanghai and Shenzhen exchanges this time is a manifestation of prudential supervision, which helps to combat excessive speculation, strengthen investor protection, and promote the smooth operation of the convertible bond market.
Regulatory authorities have focused on monitoring some abnormally volatile convertible bonds
In recent years, convertible bonds have gradually become an important financing tool for listed companies, especially small and medium-sized private listed companies. They have played an active role in serving the real economy, increasing the proportion of direct financing, and optimizing the financing structure. However, some problems have also been exposed, such as Institutional rules do not match product attributes, intraday fluctuations are large, and investor suitability management is not suitable, etc., and it is urgent to improve.
The Shanghai and Shenzhen Stock Exchange stated that the drafting of the “Detailed Trading Rules” and the “Notice of Suitability” adhered to the principle of marketization, taking into account the efficiency of the convertible bond market, market stability and investor protection, aiming to effectively prevent excessive speculation and maintain the convertible bond market. To operate smoothly, the relevant measures do not involve the adjustment of the primary market financing policy, do not affect the normal functioning of the convertible bond market financing function, and will not weaken the service support for the real economy, especially small and medium-sized private listed companies.
“The revision of the convertible bond trading rules reflects the supervision’s attention to the speculative speculation of convertible bonds in the past.” Chen Li, chief economist and director of the research institute of Chuancai Securities, told the “Securities Daily” reporter.
In fact, the regulatory authorities have focused on monitoring many convertible bonds and imposed corresponding penalties for violations. For example, on May 23, the Shanghai Stock Exchange issued a disciplinary action against Zheng Moumou for hyping up Yongji Convertible Bonds. Since June, the Shanghai Stock Exchange has continued to focus on monitoring the abnormally volatile convertible bonds such as Eastern Time Convertible Bonds; the Shenzhen Stock Exchange has focused on monitoring the abnormally volatile “Tailin Convertible Bonds” and other convertible bonds.
Tian Lihui said that while regulating the trading rules of the convertible bond market, the regulatory authorities should also promote penetrating dynamic supervision and punish violations of laws and regulations such as market manipulation and insider trading.
20% rise and fall to curb excessive speculation Set a threshold to strengthen investor protection
In general, the main points of the Detailed Transaction Rules and the Notice of Suitability are as follows:
The first is to set up and down limits. Convertible bonds issued to unspecified objects rose by 57.3% and fell by 43.3% on the first trading day after listing. After the first trading day of listing, the ratio of ups and downs was 20%.
The second is to clarify the criteria for abnormal fluctuations. Combined with the adjustment of price fluctuations, the standards for abnormal fluctuations and serious abnormal fluctuations in the price of convertible bonds have been added, and the verification and information disclosure obligations of listed companies in the case of abnormal fluctuations and serious abnormal fluctuations have been clarified.
Third, according to the characteristics of the convertible bond trading mechanism and the need to prevent and control speculation, the types of abnormal trading behaviors were added to further strengthen the prevention of speculation.
The fourth is to clarify the investor suitability management requirements for issuing convertible bonds to unspecified objects. On the basis of the addition of the access requirements of “2 years of trading experience + 100,000 yuan in assets”, a new and old separation arrangement has been set up to strengthen investor protection and ensure that existing investors continue to participate without being affected.
The fifth is to add a special logo. A “Z” mark is added before the securities abbreviation on the last trading day of the convertible bonds to fully remind investors of risks and effectively protect the legitimate rights and interests of investors.
Sixth, do a good job in the connection with the “Bond Trading Rules”, and adjust the processing method of convertible bond declarations exceeding the price limit from “temporary storage transaction host” to “invalid declaration”, which is consistent with other bonds, and some textual expressions are adjusted. Adjustments, such as “auction transaction” to “matching transaction”.
Chen Li said that setting the price range limit is conducive to calming the abnormal fluctuations in the market. From the perspective of protecting investors, the Trading Rules can play a positive role. Since there is a very strong correlation between convertible bonds and the price of the underlying stock, the new rules also make further requirements for the disclosure of information affecting the price, which is closer to some existing relevant regulatory rules. From the perspective of investor suitability, the new rules also fully consider the circumstances of previous transaction account holders, and make a distinction between the old and the new, and the system design is more reasonable.
Tian Lihui said that the convertible bond market is relatively complex, and some investors with little investment experience participating in convertible bond transactions are prone to serious losses. Thresholds have been set for new entrants to the market, and investor protection has been strengthened. In addition, in order to further strengthen investor protection in the convertible bond market, it is necessary to strengthen investor education, so that investors understand market risks, and timely disclose penalties for violators, so as to better warn investors and curb the wind of speculation.
The Shanghai and Shenzhen Stock Exchanges stated that they will officially release the “Trading Rules” after all preparations such as relevant feedback, collection and evaluation of suggestions, and absorption and adoption are completed. Next, the Shanghai and Shenzhen Stock Exchanges will continue to practice the policy of “system building, non-intervention, and zero tolerance”, adhere to the direction of market-oriented and legalized reform, and follow the unified deployment of the China Securities Regulatory Commission, consolidate the institutional foundation, maintain transaction order, and continue to promote sustainable The high-quality development of the bond market will enable the convertible bond market to better serve the real economy.Return to Sohu, see more
Editor:
Disclaimer: The opinions of this article only represent the author himself, Sohu is an information publishing platform, and Sohu only provides information storage space services.