Securities Regulator Releases New Rules Limiting Shareholders in Selling their Stocks
As the stock market continues to take a stumble, China’s securities regulator recently unveiled a new set of rules that will limit big shareholders from selling their stocks. The China Securities Regulatory Commission (CSRC) is asking big shareholders and its management, and those holding more than 5 percent of company shares not to offload more than 1 percent of in a period of three months.
Companies that want to reduce their holdings will have to publicize their plans at least 15 day beforehand. The new rules will take effect on January 9. Meanwhile big shareholders are locked into their holdings for six months since July was the China Securities Regulatory Commission banned the selling of stocks to stem a summer market out. As the ban is due to expire at the end of the week with the introduction of the new measures is not assign of an exit of the national team that include China Securities Finance whose function is to stabilize the market.
The move came after the trading in the Shanghai and Shenzhen bourses were suspended Thursday after shares tumbled 7 percent in thirty minutes of trading which triggered the circuit breaker mechanism for the second time this week when a similar case happen on Monday the first day when the circuit breaker mechanism took effect. Last Thursday trading was the shortest one in the history of the capital market in China.
The circuit breaker mechanism was copied after the Hushen 300 Index that reflects the performance of the bluechips listed in Shanghai and Shenzhen. As the index rises or falls by 5 percent, the circuit breaker imposes 15 minute suspension in trading. But if the Hushen Index rises or falls over 7 percent trading is suspended for a day.