BEIJING, Sept. 6 (Xinhua) -- China Securities Regulatory Commission (CSRC) guided bourses in Beijing, Shanghai and Shenzhen to formulate and issue circulars on reporting algorithmic trading of stocks and stricter management over algorithmic trading to promote healthy development of the sector, reported Xinhua Finance on September 1.
The three exchanges, namely Beijing Stock Exchange, Shanghai Stock Exchange and Shenzhen Stock Exchange, have released on September 1 respective circulars in this regard, all of which will come into effect from October 9 this year.
Broadly deemed as a move to echo market urges and deepen systemic innovation in key fields, debut of these circulars marked the formal formation of the reporting rules and corresponding supervisory arrangements on algorithmic trading in China, said the report.
Recent years, algorithmic trading kept growing in China's A-share market and gradually became one of the important ways for investors to participate in investment in securities market at home.
Despite its active role in improving trading efficiency and adding market liquidity, algorithmic trading poses potential risks of amplifying market volatility in specific circumstances and makes related regulatory guiding necessary.
Circulars of the three bourses on reporting algorithmic trading mainly define the parties responsible for reporting and methods and contents of reporting and require additional reporting of high-frequency trading.
Currently, the existing trading accounts required by the circulars to report algorithmic trading take up merely a small proportion of the total and as a majority of them are possessed by institutional investors who have sufficient time to prepare, debut of the circulars is unlikely to affect normal trading of individual investors.
Circulars on enhancing algorithmic trading management define the management responsibilities of securities brokers over algorithmic trading, and require stronger monitoring of key affairs such as abnormal transactions that may influence the securities trading price and volume or systemic safety of bourses and at the same time exchanges to apply differentiated management requirements over high-frequency trading.
The report said these circulars are helpful to improve market transparency and regulatory supervision and convey the compliance-based trading idea to the market to further boost the healthy development of algorithmic trading and securities market. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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