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OTC market to reopen to individual investors
By Lydia Chen |
February 22, 2011, Tuesday
|
Online Edition
Online Edition
CHINA is considering reopening its burgeoning over-the-counter board to individual investors who have at least two years of stock trading experience with a threshold fund of 500,000 yuan (US$76,103) in accounts.
The reopening to individual investors came nearly two years after China closed the door due to low trading volumes in the third market.
Individual investors who are barred from the market will be allowed to trade at a minimum volume of 1,000 shares each time under the new rule.
Market makers will also be introduced to ensure trading will be active in this market.
China launched its first OTC market in June 2001 in Beijing to accommodate stocks de-listed from the main boards in Shanghai and Shenzhen as well as stocks formerly listed on the Securities Trading Automated Quotations network and National Electronic Trading system.
STAQ and NET, set up in the 1990s for firms failing to meet main-board listing requirements, were closed in 1999 due to rampant irregularities. In 2006, the Beijing-based OTC board was turned into a market where technology firms in Beijing's Zhongguancun Technology Park could trade shares.
But in June 2009, access to the OTC market was closed to individual investors over sloppy trading. The market has several requirements prohibitive to small investors. For instance, it requires investors to trade a minimum of 30,000 shares each time.
Last July Shanghai set up its OTC market in the Zhangjiang Hi-Tech Park in Pudong with the aim to help start-up firms in the Yangtze River Delta region raise money. Other OTC markets are in Tianjin, Shenzhen and Hangzhou.
The reopening to individual investors came nearly two years after China closed the door due to low trading volumes in the third market.
Individual investors who are barred from the market will be allowed to trade at a minimum volume of 1,000 shares each time under the new rule.
Market makers will also be introduced to ensure trading will be active in this market.
China launched its first OTC market in June 2001 in Beijing to accommodate stocks de-listed from the main boards in Shanghai and Shenzhen as well as stocks formerly listed on the Securities Trading Automated Quotations network and National Electronic Trading system.
STAQ and NET, set up in the 1990s for firms failing to meet main-board listing requirements, were closed in 1999 due to rampant irregularities. In 2006, the Beijing-based OTC board was turned into a market where technology firms in Beijing's Zhongguancun Technology Park could trade shares.
But in June 2009, access to the OTC market was closed to individual investors over sloppy trading. The market has several requirements prohibitive to small investors. For instance, it requires investors to trade a minimum of 30,000 shares each time.
Last July Shanghai set up its OTC market in the Zhangjiang Hi-Tech Park in Pudong with the aim to help start-up firms in the Yangtze River Delta region raise money. Other OTC markets are in Tianjin, Shenzhen and Hangzhou.
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