In the new rules of the Shenzhen Stock Exchange, once the intraday trading price of convertible bonds rises or falls by 30% or more from the previous closing price, trading will be temporarily suspended until 14:57.
In recent times, the convertible bond market has been extremely active, with prices fluctuating sharply, and individual convertible bond transaction prices have seriously deviated from the company's stock price.
Regarding the sudden increase in the valuation risk of convertible bonds, on the evening of October 23, the Shenzhen Stock Exchange reminded investors to be highly vigilant and rational in investing. At the same time, the Shenzhen Stock Exchange also stated that it will carefully supervise the transactions of convertible bonds, especially strengthening Intraday real-time monitoring, including abnormal ups and downs of convertible bonds into key monitoring, and timely supervision of abnormal transactions.
As early as May 22 this year, the Shenzhen Stock Exchange issued the "Notice on Issues concerning the Implementation of Temporary Suspension of Trading of Convertible Corporate Bonds" (Shenzhen Stock Exchange [2020] No. 268), which implemented measures for the temporary suspension of trading of convertible bonds. Detailed regulations are given.
On the evening of October 30th, the Shenzhen Stock Exchange re-issued the "Notice on Improving the Temporary Suspension System of Convertible Corporate Bonds", which implemented more stringent and detailed regulations on the temporary suspension of convertible bonds, and abolished the previous announcement. (Shenzhen Securities Meeting [2020] No. 268) notice that the new rules will come into effect on November 2, 2020.
According to the new rules, the Shenzhen Stock Exchange may impose an intraday temporary suspension of trading on convertible corporate bonds without price limit on the following circumstances: (1) The intraday transaction price has risen or fallen for the first time compared with the previous closing price. Or more than 20%, the temporary suspension time is 30 minutes; (2) If the intraday transaction price rises or falls by 30% or more from the previous closing price, the trading will be temporarily suspended until 14:57.
Among them, the biggest change is that under the old rules, if the intraday transaction price rose or fell 20% or more than the previous closing price for the first time, 30%, the duration of a single temporary suspension was 30 minutes.
In the new rules, once the intraday transaction price rises or falls by 30% or more than the previous closing price for the first time, trading will be temporarily suspended until 14:57.
The rest of the rules remained largely unchanged, including the temporary suspension of trading for more than 14:57, the trading will be resumed at 14:57 on the same day, and the resumption call auction will be conducted on the accepted applications, and then the closing call auction will be conducted.
During the temporary trading suspension period, investors can declare or cancel the declaration.
At the time of resumption of trading, a resumption call auction shall be implemented for the accepted declarations.
In addition, the Shenzhen Stock Exchange stated that it can adjust the relevant indicator thresholds according to the trading conditions of convertible corporate bonds, or take further intraday risk control measures.
Author: Andrews