| HK, Shanghai to unify trading rules |
| Thursday,March 29,2007 Posted: 06:30 BJT(2230 GMT) South China Morning Post |
Companies with dual listings in Hong Kong and Shanghai will be required to suspend trading simultaneously for announcement of any price-sensitive information or clarification of market rumours, and when disclosing corporate news, according to the Shanghai Stock Exchange's new proposals. A source familiar with the reform said in an interview yesterday the proposals were drafted by a working group formed several months ago between stock exchange officials and regulators from Hong Kong and the mainland on how to align different suspension policies in the two markets. Under present rules, the Shanghai stock exchange will suspend trading of a stock on market reports or rumours related to the company. However, the Hong Kong exchange leaves the suspension decision to the firms. As more companies are seeking to list in both markets during initial public offerings, and more Hong Kong-listed mainland firms list shares in the A-share market, the disclosure issue will become more pressing. The problem was highlighted in June last year when trading in the Shanghai-listed shares of China Petroleum & Chemical Corp and two of its subsidiaries was suspended by the mainland exchange amid rumours of privatisation. However, their Hong Kong-listed shares continued to trade, and surge, for almost an hour before the companies requested a suspension. That incident triggered the establishment of the joint working group, which reached an initial agreement on proposals announced by the Shanghai stock exchange in a consultation yesterday. Under the latest proposals, the Shanghai exchange still retains the power to suspend companies, but in the case of those that also have Hong Kong-listed shares, the companies' managements can decide whether they want to request a suspension at both exchanges. "Companies that have listings in both markets must also actively communicate with the exchanges, investors and media about corporate information. They must announce the information at the same time and the materials released in both markets must be consistent," the source said. The two exchanges still needed to work out details on how to implement the new requirements before deciding on a timetable. "One issue that we would need to discuss is to work out the time of trading resumption because the Hong Kong and Shanghai exchanges have different trading hours," the source said. Stocks on the Hong Kong exchange trade from 10am to 12.30pm and then from 2.30pm until 4pm. In Shanghai, they trade from 9.30am to 11.30am and then from 1pm to 3pm. Legislator for financial services industry Chim Pui-chung welcomed the move, saying it would better protect retail investors. |
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