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High-Tech Board Mulls Price Protections

By Zhang Yu and Teng Jing Xuan / Apr 12, 2019 06:17 PM / Finance

Photo: IC

Photo: IC

China's new Nasdaq-style high-tech board is considering implementing a price protection mechanism to help investors control trading risk, the Shanghai Stock Exchange said in a notice Thursday.

The mechanism would place an upper limit on the prices of buy orders that can be executed, and a lower limit on sell orders, according to the notice.

Since the new board will do away with the usual daily limit for stock price movements in the first five days of trading, and widen the daily limit after those five days to 20% from the 10% imposed on other mainland boards, there’s greater room for fluctuation, analysts have said.

Implementation details for the price protection mechanism have not yet been announced, and brokerages have yet to receive instruction on how the mechanism should be adopted, Caixin learned.

The high-tech board is set to become a testing ground for changes to China’s mainland stock exchanges. Other innovations include allowing the listing of mainland companies structured as variable interest entities. Many of such firms have been excluded from other mainland bourses because they’re seen as foreign enterprises as they accepted overseas investment. 

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