The Shenzhen Stock Exchange (SSE) has established a risk managing committee and issued guidelines for managing transactions, requiring securities dealers to shoulder more responsibilities in normalizing trade among clients, the Shanghai Securities News reported today.
As the bullish market continues this year, there were excessive speculations in a few securities exchanges, causing abnormal price fluctuations. Meanwhile, some investors took advantage of the Internet to spread false information, intending to induce other investors to follow blindly.
To deal with such illegal activities in the securities market, the latest guidelines demand the securities dealers take more responsibilities in managing the client transactions. Key responsibilities include educating investors, and warning them about normal risks, particular risks, irregularity risks and investment consulting risks.
The guidelines require that the entrusted dealers have the right to refuse or suspend liabilities to clients who use their securities accounts illegally or pursue illegal transactions.
In terms of supervision over clients' transactions, the guidelines also ask dealers to set up special departments to regulate transactions and offer corresponding products and services while classifying investors. Also, a transaction monitoring system is required to focus on limited accounts and notify clients in case of any abnormal transaction.
Since the beginning of this year, SSE has introduced several measures strengthening self-disciplined transactions, with example as to temporarily suspend the warrants and initial public offerings with irregular moves when they are listed on the first day.
However, the exchange's effort alone is not enough to normalize market activities, and securities dealers also need to contribute.
(Chinadaily.com.cn September 3, 2007)
