Caixin
Nov 22, 2018 06:59 PM
FINANCE

Exchanges to Limit Length of Share Suspensions to Curb Abuse

The abuse of trading suspensions has become a major obstacle to global acceptance of China’s stock markets. Photo: VCG
The abuse of trading suspensions has become a major obstacle to global acceptance of China’s stock markets. Photo: VCG

The Shanghai and Shenzhen stock exchanges issued draft rules that would significantly limit the amount of time companies can halt trading of their shares, amid a regulatory crackdown on abuse of a practice that puts off foreign investors and can leave shareholders in the lurch.

Trading suspensions have often been used by companies as an excuse to stop their shares from sliding when bad news hits the market, and can sometimes drag on for months, locking up shareholders’ money in stocks they can no longer sell. In 2017, shares of 69 Shanghai-listed companies were suspended on average each day, according to the Shanghai Stock Exchange — around 5% of all the companies listed that year, according to Caixin calculations. Recently, this number has been about 10, or 0.7% of the total.

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