●   The Shenzhen Stock Exchange (SZSE) Strengthens the First-Day Risk Control on Stocks Going Public on the GEM

 

In order to ensure that stocks have a smooth public transition to the GEM, the SZSE issued the Notice for First-Day Exchange Monitoring and Risk Control on Initial Public Offerings on the Growth Enterprise Market (the Notice) on September 24, 2009.

 

According to the Notice, the SZSE can temporarily suspend trading for 30 minutes when the first rise or drop of the transaction price on the big board amounts to or exceeds 20 percent of that day’s opening price. The SZSE can temporarily suspend trading for another 30 minutes when the first rise or drop of the transaction price on the big board amounts to or exceeds 50 percent of that day’s opening price. The SZSE can temporarily suspend trading at 2:57 p.m. when the first rise or drop of the transaction price on the big board amounts to or exceeds 80 percent of that day’s opening price.

 

The Notice stipulates measures for first-day exchange monitoring and management of exceptional major transactions ruled on the Small and Medium-Sized Enterprises Board. The Notice also establishes clearly defined regulations for clients’ transactions.

 

(Source: The Shenzhen Stock Exchange)

 

 

●  The China Securities Regulatory Commission (CSRC) Allows Investment Funds to Invest in the Growth Enterprises Market (GEM)

 

On September 22, the CSRC stipulated that investment funds may invest in the GEM on the basis of fund contracts.

 

Pursuant to the Interpretations for Securities Investment Funds to Invest in Securities Offered in the Growth Enterprises Market (the Interpretations) issued by the CSRC to investment funds, these funds can now invest on the GEM as a new type of security. But whether each fund can invest on the GEM will be determined by the terms of their contracts.

 

The Interpretations places an emphasis on information disclosure and investment funds should disclose investment information for stocks and convertible loan stocks on the GEM in advance of any transactions.

 

(Source: The China Securities Regulatory Commission)

 

 

●  The China Securities Regulatory Commission (CSRC) Strictly Regulates Unlawful Behavior Related to the Growth Enterprises Market (GEM)

 

Compared with the Main-Board Market and the Small and Medium-Sized Enterprises Board, companies going public on the GEM may encounter more risks in their regulatory operations, ongoing business operations and asymmetric information disclosure. Transactions on the GEM mainly encounter risks of excessive speculation, insider trading and market manipulation.

 

Regarding stock issuance, going public, and transactions on the GEM, the rules formulated by CSRC for the above mentioned risks are stricter than the ones for the Main-Board Market and the Small and Medium-Sized Enterprises Board. The measures that have been taken to strengthen the law’s enforcement are as follows:

 

1. Thoroughly investigating cases of suspected market manipulation, monitoring first-day transactions, limiting transactions that illegally boost the price of a stock and announcing these activities to the public, engaging in a timely investigation of cases suspected of violating laws and regulations, and announcing the results of these investigations to the public.

 

2. Strengthening supervision and attaching importance to unlawful acts of financial fraud, fund diversion, insider trading and market manipulation for companies going public on the GEM; pursuing criminal punishments for the above stated unlawful acts.

 

(Source: The Xinhua Net)