Chinese bourses improve trading mechanism to revive stock market

HONG KONG (Reuters) – Shanghai and Shenzhen stock exchanges said late Thursday they would study measures to lower investors’ trading costs and improve liquidity to further stimulate the market.

The measures include allowing investors to place smaller orders in auction trading and improving trading mechanisms for exchange-traded funds (ETFs). The exchanges also revised rules to allow faster development of index funds.

The announcements came after top Chinese leaders vowed to “invigorate capital markets and boost investor confidence” during the July politburo meeting as Beijing struggles to revive flagging economic growth.

They also came after China’s securities regulators nudged mutual fund managers to cut fees to reduce trading costs.

Shanghai and Shenzhen stock exchange said in identical statements on Thursday that they would “roll out a series of measures to stimulate market vigour, lubricate trading, and increase market appeal.”

More specifically, investors trading stocks or listed funds would be allowed to place orders of a minimum of one share, or one unit. Currently, each order must be in blocks of 100 shares or units.

Such a change would reduce investors’ costs, enable more efficient use of capital, and help improve market liquidity, the bourses said.

In addition, the exchanges said they would study after-hours fixed price trading mechanism for ETFs, which will would reduce price fluctuations.

The bourses said they would also release the English version of trading rules to improve transparency and would “balance smooth trading and regulating excessive speculation”.

(Reporting by Samuel Shen in Shanghai, Twinnie Siu in Hong Kong; Editing by Bernadette Baum and Sam Holmes)