New trade mechanism for bourse

Source: Xinhua | 2018-08-08

THE Shanghai Stock Exchange will apply a new mechanism to set daily closing prices to help maintain price stability. Under the new system, from August 20 the bourse will enter the call auction stage from 2:57pm to 3pm to determine final prices for the day, the exchange said late on Monday on its website.

All prices bid during this period will be treated equally. Stock prices will be determined in accordance with the principle of maximum volume.

Closing prices are currently set at the weighted average of the last minute. This means the closing price can be easily affected at the end of the day, which may be abused to deliberately lift closing prices to lure investors in the next trading session.