Shanghai and Shenzhen Stock Exchanges Issue Detailed Rules on Trading of Convertible Bonds

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The Shanghai and Shenzhen Stock Exchanges have both issued new rules concerning the trading of convertible bonds.

The new rules are scheduled to come into effect on 1 August, with the bourses stating that they will “standardise various activities in relation to the convertible corporate bonds of listed companies, and drive the highly quality growth of the convertible bond market.”

Key provisions of the rules include:

  • Restrictions on price movements of between -43.3% and 57.3% on the first day of trading, as well as 20% and 30% temporary suspension mechanisms.
  • Limitations on price movements of 20% on the second day of trading.
  • Standards for extreme volatility or unusual volatility in the prices of convertible bonds.