The main board also has a price-trading cage. The 2 per cent price-trading cages were first introduced in the cib stock trade and were subsequently applied in the context of the reform of the registration of the entrepreneurship board, which was introduced in the main board。
The main board also has a price-trading cage。
The 2 per cent price-trading cages were first introduced in the cib stock trade and were subsequently applied in the context of the reform of the registration of the entrepreneurship board, which was introduced in the main board. In contrast to the previous period, the addition of “ten units with minimal price variations (i. E. $ 0. 1)” was added。
In interviews with chinese journalists, the issuer was informed that, under the new price-trading cage, a high value of 2 per cent to 0. 1 dollars was taken at the time the purchase was declared. For some low-priced shares, a direct increase or reduction of $0. 1 can be made without reference to the 2 per cent limit in the price declaration. This is to further expand the offer space for low-cost shares. For high-priced shares, price cages can well limit large-scale price increases, reduce price shocks and improve liquidity。
Previously, the declaration system for over-price cages had been in place for the time being and could be concluded when the conditions were met. The new regulations are direct and invalid declarations beyond the scope. This, according to industry sources, could reduce price manipulation and the wind of the diaspora. In addition, part of the voucher trader, app, may lose its conditioner function and need further optimization。
The main board also has a trading price cage
The transaction rules issued by the surrender (revised in 2023) state that, if the stock is sold or sold at the stage of a continuous bid, the following requirements should be met for the effective declaration of price range: the purchase price may not be higher than 102 per cent of the base price and the purchase value of the ten units with the lowest change in prices above the base price; the sale price may not be lower than 98 per cent of the base price; and the sale of the ten units with the lowest change in prices below the base price。
At the same time, special provisions have been made for the trade in creative stock. In the case of the purchase and sale of market-based stock, the price limit for the successive period of competitive bidding should meet the following requirements for valid price declarations: the purchase price must not exceed 102 per cent of the benchmark price; and the sale price must not be lower than 98 per cent of the benchmark price。
The drafting note on the rules of the transaction in which the surrender is made indicates that the master board trading system is optimized. One of these is the provision to optimize the scope of effective declaration of prices by adding to the existing 2 per cent requirement for effective declaration of price ranges for replicating firm-based stocks ten units with minimal price variations。
The revision of the rules of the transaction, in depth, indicates the simultaneous optimization of the main board and the business board trading system. It optimizes the price cage mechanism. An additional “ten minimum price change units” mechanism has been established on the basis of the current 2 per cent range of validly declared prices. When the 2 per cent range is less than 10 minimum price change units (i. E., 0. 1 yuan), it is taken up to $0. 1 and the required space is granted to low-value units。
Specifically, a valid declared price at the successive stages of the bid for shares shall meet the following requirements: the purchase of the declared price shall not exceed 102 per cent of the base price and the purchase of the highest value of the ten units with the lowest stated price change above the base price; the sale of the declared price shall not be less than 98 per cent of the base price sold; and the sale of the ten units with the lowest stated minimum price change below the base price。
Give full consideration to low-value quotations
One of the larger highlights of the optimization of this price cage was the introduction of the “ten minimum price change units”. What does that mean
The head of the head of the business explained it to chinese journalists. According to the source, under the current regulations, the minimum rate of change for a declared price is 0. 01, or 0. 1 for ten. The provision could therefore be understood as not exceeding the high value of 2 per cent and $0. 1 per cent of the benchmark price at the time of purchase of the stock。
“at the outset, in the course of the actual operation, the fact that the price of a part of the low-priced stock did not exceed 2 per cent led to more restrictive and narrow quotation space. For example, the two dollar share price may not exceed 2. 04 dollars at the time of purchase, and the maximum space for declaration will touch 0. 04 dollars upward, which is narrower. The new rules now offer a high value of 0. 04 and 0. 1, so the offer can be 2. 1 and effectively expand the price space for low-value shares. According to the head of the business department。
There are also industry sources who believe that this is essentially an exemption regime for price-trading cages for some low-cost shares. Under the 0. 1 dollar inverse, lower-priced shares below $5 can be declared at more or less 0. 1 dollars, without the 2 per cent price constraint。
In the view of liu yujin, professor of finance at the great guanghua school of management, the price cage was designed primarily to prevent a sharp drop in stock prices caused by large-scale errors (i. E., “willong fingers”), large-scale sweeps or crashes, but the previous pilot registration phase had also limited the price space for low-priced shares by setting effective price ranges based on the ratio of one stock price, making it more difficult for real information on low-price prices to be disclosed in the market in a timely manner. The addition of 10 minimum price change units on a 2 per cent basis allows for a balance between high- and low-priced shares and gives them more space to file, thereby reducing the negative impact of price restrictions on the efficiency of stock price discovery while carefully sifting suspicious or false orders。
To prevent price hikes
In addition to expanding the offer space for low-priced shares, another function of the price-trading cage is to limit large-scale increases in high-priced shares。
“previously, the main board could be traded directly, i. E. Declared directly at 110 per cent of the price, thus rapidly increasing the stock price. With a price cage, a maximum of 102 per cent has been declared, which has served to stabilize prices.” a senior member of the market has indicated to journalists。
Yoo yu jian indicated that following the implementation of the pilot registration of the entrepreneurship board, the commissioning ratio outside the range of valid offers was significantly reduced and orders were more centralized. The design of this centralized entrustment declaration, in turn, allows for more transactions within a limited range of price variations, which in turn leads to a reduction in the trade price differentials and price shocks, improving the liquidity of short-term transactions in the day。
At the investor-specific operational level, the impact is clear. “in the case of the master plate stock, the cut-off can only be raised by eight points, with seven points of time when the bill is scrap; 2 per cent above the current price is scrap; and thereafter, the sky floor and the ceiling disappear. According to the above-mentioned sources。
There is also a major change in this reform. Previously, the register price cage provided that a limited declaration beyond the scope of a valid bid could not immediately bid and was kept in the trading mainframe (order suspense mechanism); when price fluctuations brought it into the range of valid bids, the trading host automatically took the declaration out and took part in the bid. The most recent requirement, however, is that a declaration exceeding the price limit or within the range of validly declared prices at the time of the declaration is invalid。
“the temporary storage of orders in price cages is a risk of stock-price manipulation, such as the possibility that investors with information may activate a series of pending orders after the base price has been triggered by the order layout, leading to windfalls in potential dispersors and a sharp fall in prices. Now, the temporary storage of orders has been adjusted to direct rejections, which, while enhancing immediate feedback on transactions, can also reduce the sympathizing behaviour of the diaspora in the event of market panic, thereby making the trading activity in the market more rational.” liu yujin believes。
The issuer indicated to the chinese correspondent that this change would render the current issuer's app conditioner function ineffective and would need to be further optimized under the new regulations。
Photo by zhao yan
