news

in order to strengthen the supervision of high-frequency trading and focus on monitoring abnormal trading behaviors, the "securities market programmed transaction management regulations (trial)" (hereinafter referred to as the "management regulations") will be officially implemented on october 8, 2024.

the "management regulations" provide comprehensive and systematic provisions for the supervision of programmed transactions in the securities market. it is clarified that stock exchanges implement real-time monitoring of programmed transactions and focus on monitoring abnormal trading behaviors. clarify the definition of high-frequency trading and propose differentiated regulatory requirements in terms of reporting information, fees, transaction monitoring, etc.

general idea

seeking advantages and avoiding disadvantages, emphasizing fairness, effective supervision, and standardized development

the china securities regulatory commission stated that programmed trading is the product of the integration and development of information technology progress and capital markets. it started late in my country's market but has developed rapidly in recent years and has become an important trading method in the securities market. programmed trading helps provide liquidity to the market and facilitates price discovery. however, programmed trading, especially high-frequency trading, has obvious technology, information and speed advantages over small and medium-sized investors. at some points, there are also problems such as strategic convergence and trading resonance, which increase market volatility.

article 45 of the "securities law of the people's republic of china" stipulates that "those who automatically generate or issue trading instructions through computer programs to conduct programmed transactions shall comply with the regulations of the securities regulatory authority of the state council and report to the stock exchange, and shall not affect the stock exchange." system security or normal transaction order."

in recent years, the china securities regulatory commission has attached great importance to the supervision of programmed transactions and has carried out a series of tasks, including strengthening the registration and inquiry of quantitative private equity funds, establishing and improving a data statistics and monitoring mechanism, and establishing a programmed transaction reporting system in the stock market. on the basis of summarizing the previous supervision practices, the china securities regulatory commission has researched and drafted the "management regulations" focusing on the main lines of strengthening supervision, preventing risks, and promoting high-quality development, and in accordance with the overall idea of ​​"seeking advantages and avoiding disadvantages, highlighting fairness, effective supervision, and standardizing development" 》.

strengthen transaction monitoring

clarify the differentiated management requirements for high-frequency trading

the first is to clarify the definition and overall requirements of programmatic transactions. programmed trading refers to the act of automatically generating or issuing trading instructions through computer programs to conduct securities transactions on a stock exchange. relevant activities should follow the principle of fairness and must not affect the security of the stock exchange system or disrupt the normal trading order.

the second is to clarify reporting requirements. programmed trading investors should report basic account information, fund information, transaction information, software information and other information in accordance with regulations, and implement the requirement of "report first, then trade". programmed trading can only be conducted after fulfilling reporting obligations.

the third is to clarify transaction monitoring and risk prevention and control requirements. stock exchanges implement real-time monitoring of programmed transactions and focus on monitoring abnormal trading behaviors. at the same time, the customer management responsibilities of securities companies will be further consolidated and the compliance and risk control requirements for institutional investors will be clarified.

the fourth is to strengthen information system management and clarify regulatory requirements for technical systems, trading units, hosting, and transaction information system access related to programmatic trading.

the fifth is to strengthen the supervision of high-frequency trading. clarify the definition of high-frequency trading and propose differentiated regulatory requirements in terms of reporting information, fees, transaction monitoring, etc.

sixth, clarify supervision and management arrangements. if institutions and individuals related to programmed trading violate relevant regulations, stock exchanges and industry associations will take management measures in accordance with the regulations, and the china securities regulatory commission and its dispatched agencies may take regulatory measures or impose penalties in accordance with the law.

seventh, it is clarified that northbound programmatic transactions shall be included in reporting management and transaction monitoring standards shall be implemented in accordance with the principle of consistency between domestic and foreign capital. other management matters shall be subject to these regulations. specific measures shall be formulated by the shanghai and shenzhen stock exchanges and shall be announced separately.

in may of this year, information on the website of the china securities regulatory commission showed that: in the early stage, the china securities regulatory commission publicly solicited opinions from the public on the "management regulations" and listened to the opinions and suggestions of domestic and foreign investors and market institutions through discussions, surveys, etc. all parties generally support and agree with it, and their evaluations are positive. some of the opinions and suggestions submitted are related to the understanding of the provisions, and we have communicated and explained them to relevant investors and market institutions; most of them involve the detailed implementation arrangements of the "administrative regulations", and we will guide stock exchanges, securities industry associations, funds, etc. industry associations and others should fully draw on the mature experience of overseas markets when formulating and improving implementation details and relevant business rules, listen to the opinions and suggestions of all parties, and study and clarify them as soon as possible.

comprehensive china securities regulatory commission, securities daily

(source: sichuan daily)

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