China issues draft rules to strengthen stock market trading, listing regulations

China issues draft rules to strengthen stock market trading, listing regulations

FILE PHOTO: A view of the new Beijing Stock Exchange at the Financial Street, in Beijing, China, November 15, 2021. REUTERS/Tingshu Wang/File Photo

China’s securities regulator issued draft rules to strengthen regulations on company listings, delistings and quant trading on Friday, in a move to improve the stock market and protect investor interests.

The China Securities Regulatory Commission (CSRC) strengthened delisting requirements to force unqualified companies to exit the market and vowed to step up efforts to audit delistings, according to draft rules that solicit public opinion.

To improve the quality of listed companies, the CSRC said it plans to moderately increase requirements for operating income and net profit for companies listing on the main board and tech-focused ChiNext. It would also expand on-site inspection of companies under IPO review and related intermediaries.

The proposed rules come after China’s stock market fell to five-year lows in February and authorities introduced a number of measures to revive investor confidence.

The CSRC also proposed stricter differentiated regulatory requirements for high-frequency trading to maintain fairness in the markets, by implementing additional reporting mechanisms and charging differentiated fees.

Chinese quant funds, which use derivatives and data-driven computer models, face tighter regulatory scrutiny. In February, the bourses barred a fund manager from trading for three days, saying it had broken rules on orderly trading.

Both domestic and foreign capital will be included in the transaction reporting system and be subject to the same transaction monitoring standards, the CSRC added.

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