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China securities regulator moves to reduce volatility with new rules
May 26, 2017 / 2:50 PM / 7 months ago

China securities regulator moves to reduce volatility with new rules

SHANGHAI (Reuters) - China’s securities regulator said on Friday it will revise trading rules to reduce financial market volatility, preventing stock dumping and changing the way some bonds are sold.

Investors look at an electronic board showing stock information on the first trading day after the New Year holiday at a brokerage house in Shanghai, China, January 3, 2017. REUTERS/Aly Song

The move comes as stocks held steady after a tumultuous week. Initially hurt by Moody’s downgrading of the country’s sovereign credit rating, financial heavyweights then surged amid speculation the government had intervened to stabilize the market.

The China Securities Regulatory Commission (CSRC) also appears to have slowed the pace of approval for initial public offerings (IPOs), amid worries that a flood of new listings are sucking up liquidity.

CSRC spokesman Deng Ge told a press conference that regulators will revise rules to guide major shareholders to reduce stocks “in a regulated and orderly” manner, according to a posting on CSRC’s website.

Deng made the comments in response to recent volatility caused by some big shareholders dumping shares at all costs, the statement said.

CSRC also revised securities underwriting rules, saying investors subscribing to convertible bonds no longer need to hand in money before they are awarded the allotted securities.

Under the current system, convertible bond issuance would “freeze up a massive amount of capital, disturbing money and bond markets,” CSRC said.

In another apparently market-friendly move, CSRC on Friday approved seven IPOs that aim to raise up to a combined 2.3 billion yuan ($336 million), marking a sharp reduction in IPO fundraising.

In recent weeks CSRC has typically approved a batch of 10 IPOs on Fridays that raise roughly 6 billion yuan in total.

Reporting by Samuel Shen and John Ruwitch; Editing by Elaine Hardcastle

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