China Fund News reporter Yan Ying
On the occasion of the third anniversary of the Science and Technology Innovation Board, the market maker mechanism is about to emerge.
On the evening of July 15, Shanghai Stock Exchange released the market-making and trading business rules and supporting business guidelines for the Science and Technology Innovation Board stocks, making more specific and detailed trading and regulatory arrangements for the market-making and trading business of the Science and Technology Innovation Board.
The Shanghai Stock Exchange pointed out that the Science and Technology Innovation Board is approaching its third anniversary since its opening and the market is operating smoothly. The current introduction of the market maker mechanism will help further improve the liquidity of the Science and Technology Innovation Board stocks, enhance market resilience, and better promote the construction of the sector.
The "Implementation Rules" announced this time include 5 chapters and 28 articles. The main contents include three parts: first, clarifying the application and termination of market making services; second, clarifying the rights and obligations of market makers; third, clarifying the supervision and management of market makers. . The "Implementation Rules" will come into effect on the date of issuance, and the business of providing bilateral response quotes by market makers will not be implemented for the time being.
Let’s take a look at the specific content of this business rule -
service application adopts the filing system and shall not re-apply for
Science and Technology Innovation Board market making business within 1 year after termination. The most important thing is of course the market maker. According to the "Implementation Rules", applications for market-making services for stocks on the Science and Technology Innovation Board adopt a filing system. Securities companies that have obtained market-making and trading business qualifications for listed securities can provide market-making services for specific stocks on the Science and Technology Innovation Board after filing with the Shanghai Stock Exchange.
Among them, sci-tech innovation board stock sponsors that are qualified for market-making and trading business in listed securities are encouraged, or securities companies that actually control the sponsor institution, to provide market-making services for the sci-tech innovation board stocks they sponsor during the period of continuous supervision.
The "Implementation Rules" clearly state that if a market maker applies to terminate the market-making and trading business of stocks on the Science and Technology Innovation Board, it must notify the Shanghai Stock Exchange in writing at least 15 trading days in advance, and the termination shall be subject to confirmation by the Shanghai Stock Exchange.
A market maker that applies to terminate the market-making and trading business of a specific Science and Technology Innovation Board stock shall not re-apply within one year to carry out market-making and trading business for the same Science and Technology Innovation Board stock; a market maker that applies to terminate the market-making and trading business of all Science and Technology Innovation Board stocks , and shall not re-apply to carry out market-making trading business for any Science and Technology Innovation Board stocks within one year.
At the same time, the Shanghai Stock Exchange regularly evaluates the market making services of market makers based on market making indicators, market making performance and regulatory compliance. The service evaluation of market makers is divided into AA, A, B, C, D 5 grade. In the event of negative circumstances, the Shanghai Stock Exchange may terminate the market-making business of specific or all stocks on the Science and Technology Innovation Board of market makers.
If a market maker is terminated from the market making and trading business of all stocks on the Science and Technology Innovation Board, it shall not reapply to carry out market making and trading business for any stock on the Science and Technology Innovation Board within one year.
For market makers with "good performance", the Shanghai Stock Exchange can, based on the monthly market making evaluation results of specific STAR Market stocks of the market makers, provide appropriate measures such as reducing or reducing transaction fees to market makers that actively fulfill their market making obligations.
To carry out market making transactions with its own funds The shares held shall not exceed 5%
According to the "Implementation Rules", market makers shall use special market making securities accounts to carry out market making transactions and report them to the Shanghai Stock Exchange for filing. Market makers are not allowed to use special accounts to carry out other businesses other than market-making trading business.
In terms of funds, market makers should use their own funds to carry out market-making trading business. The shares held by market makers through special accounts will be included in the consolidated calculation of the number of shares of the same listed company held by securities companies with reference to self-operated stocks, and relevant regulations such as disclosure of equity changes and short-term trading will apply. The shares of a listed company held by a market maker through a special account should not exceed 5% of the issued shares of the listed company.
The "Implementation Rules" require that market makers should have technical systems, risk management and internal control systems that meet the requirements to ensure that risks are measurable and controllable. Market makers should establish a regular stress testing mechanism and submit stress testing reports to the IPO on a quarterly basis.
In addition, the "Implementation Rules" emphasize that market makers should establish a risk prevention and business isolation system to prevent conflicts of interest, and are not allowed to use market making trading business to seek improper benefits or harm the legitimate rights and interests of investors.
If a market maker violates the detailed rules, the Shanghai Stock Exchange will take relevant regulatory measures or impose disciplinary sanctions on it in accordance with relevant rules and regulations, and record it in the integrity file in accordance with relevant regulations; if the circumstances are serious, it will be reported to the China Securities Regulatory Commission.
The Shanghai Stock Exchange pointed out that the introduction of a market maker mechanism on the Science and Technology Innovation Board is a useful attempt to further leverage the role of the Science and Technology Innovation Board as a "test field" for reform. Next, under the guidance of the China Securities Regulatory Commission, the Shanghai Stock Exchange will actively promote the work related to the market maker mechanism of the Science and Technology Innovation Board, make every effort to ensure the smooth and orderly implementation of the pilot, and continue to promote the high-quality development of the Science and Technology Innovation Board market.
More than a dozen securities firms "rushed" to apply
In May 2022, the China Securities Regulatory Commission issued the "Pilot Regulations on the Stock Market Making and Trading Business of Securities Companies' Science and Technology Innovation Board". Which securities companies are expected to get the "first share" has immediately become the focus of the industry.
For the first batch of pilot securities companies, the China Securities Regulatory Commission put forward ten requirements, including self-operated business qualifications and compliance with standards for risk control indicators. Among them, the net capital of in the past 12 months has been no less than 10 billion yuan, and the classification rating in the past three years has been Class A (inclusive) and the above two are "hard indicators". According to calculations by Huatai Research, there are approximately 26 securities firms that meet both of the above indicators.
It is worth mentioning that the classification evaluation of securities companies in 2022 will be released soon, and the above list may have some changes.
It is reported that in January this year, the Shanghai Stock Exchange invited 28 securities companies to mobilize and communicate on the launch of market making and trading of stocks on the Science and Technology Innovation Board. Each securities firm expressed its positive willingness to participate in the market making and trading business of stocks on the Science and Technology Innovation Board.
In view that this business is an administrative licensing matter and involves modification of terms such as business license and business scope changes, it needs to be reviewed by the board of directors, shareholders' meeting and other parties. The Shanghai Stock Exchange recommends that each securities firm consider the application matters in advance according to the time of the annual general meeting of shareholders, and at the same time actively communicate with the supervisory authorities on issues of concern. Based on this, various securities firms have also begun intensive preparations.
On the evening of July 8, CITIC Securities issued an announcement stating that the board of directors approved the company's "Proposal on Carrying out Market Making and Trading Business of Stocks on the Science and Technology Innovation Board" and authorized the company's operating management to apply for relevant business qualifications and handle relevant approvals and approvals in accordance with regulatory requirements. Filing procedures.
Similarly, on the evening of July 11, Tianfeng Securities and China Merchants Securities both announced that their boards of directors agreed to apply for market-making and trading business qualifications for listed securities and to engage in pilot market-making and trading business for stocks on the Science and Technology Innovation Board.
Prior to this, China Securities Construction Investment , Galaxy Securities , Guosen Securities , Orient Securities , Founder Securities , Zheshang Securities , Guojin Securities , Soochow Securities , More than a dozen securities firms, including Caitong Securities, Huatai Securities, and Guotai Junan, have stated that they plan to apply to carry out market-making trading business for stocks on the Science and Technology Innovation Board, and will make arrangements through the board of directors and shareholders' meetings for review.
Dongxing Securities non-bank team pointed out that in the long run, the market making revenue of securities firms’ Science and Technology Innovation Board is expected to reach tens of billions. While increasing sources of income, the development of the market-making business of the Science and Technology Innovation Board is expected to provide more risk hedging opportunities for securities firms’ investment lines, reduce active investment risk exposure, and stabilize investment returns. At the same time, the market-making system of the Science and Technology Innovation Board will further stimulate market vitality, increase on-site liquidity, and at the same time calm market fluctuations, which will help attract the participation of long-term value investment funds. The market and securities companies are expected to achieve a "win-win".
Industrial Securities also said that considering the high proportion of individual investors in my country and the relatively violent fluctuations of the Science and Technology Innovation Board, it may lead to irrational rises/falls in security prices, especially stocks with relatively poor liquidity. As professional value investors, market makers are relatively more rational and can use their abundant funds and treasury stock advantages to effectively adjust market supply and demand, reduce speculation, and reduce price fluctuations, thereby improving price stability.
Editor: Joey
