China's Shanghai bourse mulling wider trading band
Tue Mar 13, 1:30 AM ET
SHANGHAI (AFP) - The Shanghai Stock Exchange is mulling a proposal to widen the daily trading band as a first step before eventually scrapping the limit altogether, state press reported Tuesday.
Daily price volatility for Shanghai-listed firms would increase to 20 percent, double the current trading limit of 10 percent on either side of the opening bid, the Shanghai Securities News said, citing a study by the bourse.
Eventually the trading limit will be scrapped in favour of a "circuit-breaker" or collar system, a measure commonly used by stock exchanges during large sell-offs to avert panic selling, the newspaper said.
The collar would be activated after a stock had fallen a certain percentage, usually in a prescribed amount of time, halting or restricting the security's trade temporarily.
The Shanghai exchange is also considering allowing its biggest firms by market value to be traded an unlimited number of times. Investors now are allowed to buy and sell only once during a session.
In a further step, the bourse may introduce securities lending to member companies of its two blue-chip indices, which track the biggest 50 and the biggest 180 firms by market value, it said.
The report came after China's central bank chief rejected concerns that recent volatility on Shanghai's stock market was connected to the health of the booming Chinese economy, which last expanded at rate of 10.7 percent.
The key Shanghai index tumbled nearly nine percent on February 27 for its biggest single-day decline in 10 years, sparking a global rout which lasted for several days and left investors nervous at possible more losses to come. |
