2016/10/12 China's Stock Exchange Example the Auto-matching Trading System Only limit orders and market orders available Reverse transaction "T+1" Brokerage fee:1.5‰~25‰ Stamp tax: 1% on stock selling Tick size 1 cent Index future launched in April 2010 Short sell and margin trading started from April 2010 Simulation trading on stock index option launched in 012and2013 ETF 50 Index option launched in Feb. 2015 黑四留 tock markets in China since 1980 Early Stage: 1980-1990 Early Stage: 1980-1990, experimental period Earliest Stocks Issued Second Stage: 1991 1998, rapid development Some small-size SOEs and collective firms began without regulation to issue stocks in early 1980s Third Stage: 1999-2008, development under The shares were issued at the face value with regulation promised dividends and maturity to the Fourth Stage: 2009-present, more rational market employees and local residents after the global financial crisis Year 2015: stock market collapse in June Early Stage: 19801990 Early Stage: 1980-1990 Earliest Stocks Issued By1990, only 8 stocks were traded in Shanghai Company first publicly issued shares at RMB 100 quity financing 1980-1990 in China(in BIn RMB) nd raised capital of 3 million RMB Example: In Dec. 1984, Feile Acoustics in Shanghai issued 10,000 shares at RMB 50 to the public In January 1985, Yanzhong Industrial Company in Shanghai raised equity capital of 5 million Yuan On April 11th 1988, Shenzhen Development Bank sued stocks with Shenzhen Security Company2016/10/12 5 China’s Stock Exchange • Only limit orders and market orders available • Reverse Transaction “T+1” • Brokerage fee: 1.5‰~2.5‰ • Stamp tax: 1‰ on stock selling • Tick size：1 cent • Index future launched in April 2010 • Short sell and margin trading started from April 2010 • Simulation trading on stock index option launched in 2012 and 2013 • ETF 50 Index option launched in Feb. 2015 3-25 Example: the Auto-matching Trading System 3-26 3-27 Stock Markets in China since 1980 • Early Stage: 1980~1990, experimental period • Second Stage: 1991~1998, rapid development without regulation • Third Stage: 1999~2008, development under regulation • Fourth Stage: 2009-present, more rational market after the global financial crisis • Year 2015: stock market collapse in June Early Stage: 1980~1990 • Earliest Stocks Issued – Some small-size SOEs and collective firms began to issue stocks in early 1980s – The shares were issued at the face value with promised dividends and maturity to the employees and local residents – No underwriter involved; limited secondary market 3-28 Early Stage: 1980~1990 • Earliest Stocks Issued – Example: On July 25th 1984, Beijing Tianqiao Company first publicly issued shares at RMB 100 and raised capital of 3 million RMB. – Example: In Dec. 1984, Feile Acoustics in Shanghai issued 10,000 shares at RMB 50 to the public. – In January 1985, Yanzhong Industrial Company in Shanghai raised equity capital of 5 million Yuan. – On April 11th 1988, Shenzhen Development Bank issued stocks with Shenzhen Security Company 3-29 3-30 Early Stage: 1980~1990 • By1990, only 8 stocks were traded in Shanghai Equity Financing 1980-1990 in China (in Bln RMB) 1980-1987 1988 1989 1990 Total 1 2.5 0.66 0.43 4.59