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Beijing Stock Exchange Issues Rules for Implementing Market Making Transactions

January 19, 2023. BEIJING, China.

The relevant market-making trading model has rich practical experience in the international securities market.

On January 19, 2023 , Beijing Stock Exchange (hereinafter referred to as "CBEX") issued the "Beijing Stock Exchange Stock Market Making Transaction Business Rules" (hereinafter referred to as "Market Making Rules") and "Beijing Stock Exchange Stock Market Making Transactions" The "Guidelines for Market Making Business" (hereinafter referred to as the "Guidelines for Market Making") stipulates the procedures, rights and obligations, supervision and management of securities companies carrying out the stock market making business of the Beijing Stock Exchange. The "Market Making Rules" and "Market Making Guidelines" will come into effect on the date of promulgation.

CBEX market-making adopts a mixed trading system that implements simultaneous bidding and market-making in a single securities transaction. The relevant market-making trading model has rich practical experience in the international securities market. On the basis of bidding transactions, the CBEX introduces market makers to implement a mixed trading system, which helps to increase the depth of market orders, improve market stability, narrow market bid-ask spreads, reduce investor transaction costs, introduce incremental funds, and improve market liquidity , High-quality expansion of the service market.

In the early stage, CBEX publicly solicited opinions from the market on the "Market Making Rules" and "Market Making Guidelines". Judging from the feedback, all parties in the market actively supported the launch of the market-making system by CBEX, generally recognized the content of the rules, and actively offered advice and suggestions on business details. CBEX conducted in-depth analysis and extensive research on market opinions, and fully adopted reasonable opinions among them. The revised "Market Making Rules" consists of five chapters and 34 articles. The main contents include: First , clarify the application and termination of market making services. CBEX implements trading authorization management for market makers, and members who have obtained the qualifications for market-making trading business of listed securities can file for market-making for specific stocks after opening the market-making trading authorization. At the same time, sponsoring institutions are encouraged to provide market-making services for the stocks they sponsor. The second is to clarify the rights and obligations of market makers. Market makers should continue to provide the market with two-way quotations that meet the price difference and quantity requirements. CBEX will evaluate the development of the market-making business of market makers, and provide appropriate incentives to market makers who actively develop their business. The third is to clarify the supervision and management requirements of market makers. Market makers should establish a risk prevention and business isolation system and an abnormal transaction monitoring mechanism, and must not implement abnormal transaction behaviors to ensure that business is carried out in an orderly manner.

The revised "Market Making Guidelines" consists of nine chapters and 60 articles, mainly on the basis of the relevant provisions of the "Market Making Rules" on the procedures for market makers to carry out stock market-making transactions on the Beijing Stock Exchange and the requirements for the supervision and management of market makers And evaluation incentive mechanism arrangements, internal management requirements for market makers, etc. have been further refined.

During the early period of soliciting opinions on the rules, CBEX has organized various market participants to carry out technical system preparations and complete relevant tests. After the official release of the rules, CBEX will, under the unified leadership of the China Securities Regulatory Commission, further promote the completion of technological transformation by all market participants, and at the same time organize qualified members to carry out business preparations including authorization applications and stock filings, and make every effort to ensure that The business in the city was implemented smoothly. After all preparations are completed, CBEX will make another announcement to start market-making transactions.


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