China will act again to curb short-term speculation, insider trading and price rigging on the nation's booming stock markets, according to new rules released by the Shanghai bourse.
The rules, to be introduced on September 1, give the Shanghai Stock Exchange more power to suspend trading of stocks with large price movements and force companies to disclose more information.
The Shanghai bourse will be able to suspend trading in stocks if trading turnover spikes in such a manner that indicates there might be insider trading, according to a statement published on the exchange's website over the weekend. Trading in stocks will be able to be suspended for 30 minutes if they surge above 100 percent or drop 50 percent from their opening prices on days without price movement limits, typically when trading resumes after a suspension. China's booming stock market has surged more than 80 percent this year after jumping about 130 percent in 2006.
However, the market has been very volatile, sometimes driven by hot trading in even loss-making firms, including ST stocks - special treatment stocks of firms that have reported losses for two consecutive years. "With trading on the stock market increasingly active since the second half of last year and rising stock prices, short-term speculation, insider trading and speculation on ST stocks are also increasing," an unnamed official of the bourse was quoted as saying in the Shanghai Securities News on Monday.
In comments published Monday, Jiang Zhenghua, vice chairman of the National People's Congress, or parliament, also called for further reform of the stock market to prevent la"Although China has achieved great progress in the development of the capital market, there are still problems in the quality of listed firms and regulation," Jiang was quoted as saying by the China Securities Journal.
The move is the latest in a string of regulations introduced by authorities in recent months to clean up share trading. On July 6, authoritiers announced they would restrict how companies' state-held shares were floated on the nation's bourses to prevent a flood of stock from destabilising the market.