The Shanghai, Shenzhen, and North Stock Exchanges have established monitoring standards for abnormal trading
2024-06-11
The Shanghai, Shenzhen, and North Stock Exchanges are publicly soliciting opinions from the public on the implementation rules of programmatic trading management. The China Securities News reporter learned that the Shanghai, Shenzhen, and North Stock Exchanges have established targeted abnormal trading monitoring standards for programmatic trading, and have conducted internal trial operations. They will continue to solicit opinions from domestic and foreign investors. Industry insiders believe that the implementation rules are the first to regulate programmatic abnormal trading behavior, and the impact on the market and the regulatory significance for investor trading behavior need further observation. It is worth noting that the Shanghai, Shenzhen, and North Stock Exchanges have previously clearly stated that they will timely and appropriately release procedural abnormal trading behavior monitoring standards in accordance with relevant regulatory requirements. The current public standards for identifying four abnormal trading situations are clearly defined, mainly targeting the trading behavior of a single account or a single stock, which is not suitable for programmatic trading. The draft of the implementation rules recently released by the Shanghai, Shenzhen, and North Stock Exchanges, combined with the characteristics of programmatic trading behavior, further clarifies abnormal trading situations, stipulating four abnormal trading situations: abnormal instantaneous declaration rate, frequent instantaneous cancellation, frequent lifting and suppression, and short-term large transactions. The time interval requirements and behavioral elements of relevant situations are also refined. In the eyes of market participants, this also means that in addition to the 5 major categories and 14 types of abnormal trading behaviors stipulated in the current real-time monitoring rules of the exchange's stocks, there are also 4 additional categories of programmatic abnormal trading situations that are specifically monitored. According to the trading rules of the exchange, if investors engage in abnormal trading behavior, the exchange will take self regulatory measures such as written warnings and suspension of trading in accordance with regulations. At the same time, in the process of formulating implementation rules, the exchange continues to strengthen the supervision of abnormal trading behavior in quantitative trading, including strengthening the supervision of abnormal trading and abnormal reporting and cancellation behavior. For investors who trigger abnormal monitoring standards, measures such as telephone inquiries are taken to effectively regulate quantitative trading behavior. The reporter learned that currently, the Shanghai, Shenzhen, and North Stock Exchanges have established targeted abnormal trading monitoring standards for programmatic trading, and have conducted internal trial operations, and will continue to solicit opinions from domestic and foreign investors. The monitoring standards or continuation of the previously disclosed path, due to the fact that abnormal trading behavior in the program is the first regulation, the impact on the market and the regulatory significance for investor trading behavior need to be further observed. Therefore, previously, the Shanghai, Shenzhen, and North Stock Exchanges have clearly stated that they will timely and appropriately release procedural abnormal trading behavior monitoring standards in accordance with relevant regulatory requirements. At present, Chinese investors mainly participate in secondary market transactions through securities companies and are clients of securities companies. A person in charge of a certain securities firm stated that based on historical experience, it is speculated that regulation may continue the previous standard disclosure path. The monitoring standards for programmatic abnormal trading behavior will be released to securities companies first, with a certain transitional period reserved. Securities companies will manage customer abnormal trading behavior and release them to the market after the rules are basically mature. Specifically, in 2019, the Shanghai and Shenzhen Stock Exchanges issued reference points for monitoring abnormal stock trading to all securities companies, clarifying quantitative indicators for abnormal stock trading and requiring securities companies to monitor customer abnormal trading behavior. In terms of disclosing abnormal trading standards, the Shanghai and Shenzhen stock exchanges conducted pilot work on the Science and Technology Innovation Board and the Growth Enterprise Board in 2019 and 2020, respectively, and released real-time monitoring rules for abnormal trading on the Science and Technology Innovation Board and the Growth Enterprise Board to the entire market (trial implementation). At the same time, as regulatory practices continue to mature, exchanges continue to optimize and improve monitoring standards based on summarizing and evaluating regulatory experience, and have formed real-time monitoring rules for abnormal stock trading. These rules have been publicly released to the entire market when the comprehensive registration system is implemented in 2023. I believe that similar to traditional practices, the exchange will continuously optimize and improve specific standards based on extensive listening to opinions and suggestions, combined with actual monitoring situations; At the same time, compliance training and other forms will help securities companies and various investors better understand the specific requirements of procedural trading supervision, supervise and regulate trading behavior, and maintain market order The person in charge of the above-mentioned securities firm stated. In the context of the comprehensive promotion of computer technology today, electronic trading has become an inevitable form of modern capital market operation, and the use of computer technology for electronic trading has become a part of the operation of the capital market, which is an inevitable direction of globalization. Compared with overseas markets, domestic quantitative trading started relatively late. In recent years, with the continuous improvement of information technology, the pace of domestic market integration with international standards has been accelerating, especially for a group of practitioners with overseas quantitative backgrounds who have returned to China for development. Programmed trading in the A-share market has gradually developed since 2014 and has now become an important type of investor. In the industry's view, programmatic trading helps to promote market price discovery and improve market liquidity to a certain extent; On the other hand, there is also a possibility of exacerbating market volatility and affecting the safe operation of trading systems. In this context, it is even more important to protect small and medium-sized investors and maintain fair trading. It is also imperative for regulatory authorities to gradually introduce measures to strengthen market endogenous stability. A senior market expert believes that programmatic trading has a dual impact on the market and should be viewed rationally and objectively. It should not be rejected or left unattended, but rather adhere to the overall idea and philosophy of "seeking benefits and avoiding harm, highlighting fairness, effective supervision, and standardized development". Through a series of targeted regulatory arrangements, the excessive advantage of high-frequency trading should be restricted to maintain market order and fairness. (Lai Xin She)
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