China to tighten securities trading rules for institutions

BEIJING - China's stock exchanges and securities depository and clearing authority are soliciting opinions on their new trading rules for institutions, which are designed to prevent errors that could cause volatility and even threaten the whole market.

The new rules aim to fend off abnormal transaction and settlement risks due to technical failures or "fat finger" trading incidents, according to the China Securities Journal.

Management on stock transactions on the own accounts of brokerages, fund companies and insurers will be improved, with a daily cap on buy orders to block abnormal transactions.

Trading of A shares, preference shares, bonds, warrants and repurchase agreements will be subject to the new rules.

Individual investors will not be affected, said a statement jointly released by Shanghai and Shenzhen bourses and China Securities Depository and Clearing Corporation.

The move was considered a response to a serious trading glitch of Everbright Securities that resulted in a dramatic surge in the benchmark Shanghai Composite Index on August 16, 2013.