Shanghai Stock Exchange

	B Share

		Trading System

		Seat Application Procedures

		Listed Companies

		B Share Brokers

		B-Share Historical Quotes


		Part 1:Trading Market Profile
		Part 2:Order Trading & methods
		Part 3:Trading & Reporting Methods
		Part 4:Trading Fees

Part I Trading Market Profile

Welcome to Adobe GoLive 6
Trade seats
B Shares trading seats are divided into tangible seats and intangible seats according to the way offers are made. Trade seats that securities companies have in the SSE trading hall can make offers through their designated traders to the SSE and are called tangible seats. Securities companies can directly place orders to the SSE's mainframe computer through a front terminal and communication network located in their trading premises. These are called intangible seats.

Trading times
Shanghai B Shares' centralized group auction is from 9.15am - 9.25am every Monday to Friday and consecutive bidding is carried out from 9.30am - 11.30am and 1.00pm - 3.00pm. The market is closed on Saturdays, Sundays and domestic public holidays.

Trading units
Pricing of trading for Shanghai B Shares is calculated in US dollars. Pricing of trading for buying or selling shares is based upon the price of a single share and the minimum unit of change for a buying or selling price is US$ 0.001. Trading volume is based on lots of 100 shares or its round sum multiples as a unit. Odd lots of less than 100 shares can be sold during trading time but can not be bought.

Trade information
Everyday, the SSE timely announces instant market information of B Shares trading, stock indices, disclosure of information, announcement of suspension and resumption, trade value returns and other securities market information. Daily instant market information about B Shares is transferred to respective member companies via an electronic communication system and member companies must publish this information at their securities departments. The SSE instantly transfers trade value return of B Shares to securities departments of member companies via an electronic communication system. B Share investors can receive instant trade value return in the respective sales departments of member companies.

B Share index
The B Shares index compiled by the SSE to reflect share price movement is issued along with instant securities trading. The Shanghai B Share index is a weighted average share price index with the number of shares issued of all listed B Shares as weight number. It uses February 21, 1992 as base day and has been officially published since February 21, 1992.

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Part 2 Order Trading

Welcome to Adobe GoLive 6
Order methods
B Share investors can select one or several kinds according to the order methods provided by their securities departments (agents). Generally, order methods include:

Desk to desk trading booth orders
Desk to desk trading booth orders: investors themselves or their designated agents personally go to the B Shares trading booths of securities departments to complete orders.

Self-service orders
These can be divided into phone orders, online orders and self-service terminal orders. Investors themselves or their designated agents offer instructions for the trading of securities to a broker via telephone, fax, telex and other means of communication. They are generally completed by called phone order. Offering instructions for the trading of securities through an online shares order system is generally called an online order. Offering instructions for the trading of securities through self-service terminal system of a broker is called a self-service terminal order. Phone orders are a common way of placing orders for B Shares. Therefore, keeping telephone records (or fax papers) is extremely important. It is generally required to keep these records for relatively long period.

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Part 3 Trading Method

Welcome to Adobe GoLive 6 Reporting methods
1. The SSE handles the trading of B Shares using computer group auction and the trading of orders is valid on the day they are placed. Bidding must be completed according to stock codes prescribed by the SSE and must fully include the type of transaction, quantities, prices and other prescribed factors at the same time. After the orders are transferred to the trading system mainframe computer, the mainframe computer will transact each order based on the group auction principle of 'price precedence and time precedence'.

2. Regulations regarding the prices of orders. If trading of B shares has price change limits, only orders within the price change limits are valid. Orders exceeding the price change limits are invalid.

If trading of B shares is without price change limits, the price of orders is not limited when carrying out centralized group auction. In the case of consecutive bidding, orders that meet the following conditions are valid:

(1) The order price for buying (selling) a share is not higher (lower) than prescribed extent of the lowest (highest) selling order price currently displayed.

(2) When there is no selling (buying) order price, the order price for buying (selling) a share is not higher (lower) than prescribed extent of the highest (lowest) buying order price currently displayed.

(3) When there is neither selling nor buying of shares, the order price of buying (selling) a share is not higher than prescribed extent of latest concluded price. Where there is no latest concluded price that day, the limit price is calculated according to the previous closing price. If necessary, the SSE can carry out adjustments to the above ranges and announce them to the public.

3. Regulations for the number of orders. Orders for B shares are made with a 'share' as unit, each share having a face value of RMB1. When issued, prices are calculated in US dollars and subsequent listing, trading and clearing are all handled using US dollars. Buy orders must be in round multiples of 100 shares, orders for trading of less than 100 shares are called odd-lot trades. Presently, the SSE has prescribed that buy orders cannot be made for odd-lots but selling of odd lots is allowed.

4. Orders are valid on the day they are made. When an order can not be fully concluded at one time, unconcluded parts continue to participate in group auction throughout the day and can also be cancelled.

Bidding and conclusion
The SSE handles the bidding of B Shares according to the principle of price precedence and time precedence.
The principle of price precedence is - Higher value buy orders are concluded prior to lower value buy orders; lower value sell orders are concluded prior to higher value sell orders.
The principle of time principle is: - Where the kind of transaction and order prices are the same, preference is given to the first order to be received. Precedence of orders is confirmed according to the time an order is accepted by the computer trading mainframe of the SSE.
Bidding for SSE B Shares is divided into centralized group auction and consecutive bidding. Centralized group auction is a group auction method of centralizing and matching orders received within a certain period. The principles of centralized group auction are:

(1) The largest price-level of trade volume;
(2) Buy orders higher than the concluded price and sell orders lower than the concluded price are all concluded;
(3) When at least one of either the buyers or sellers at the same price as the concluded price is fully concluded and when two or more price levels conform with the above conditions, the middle price is taken as the current rate.

For consecutive bidding, the principles of concluded prices are:
(1) Buying price is same as selling price;
(2) When the buy (sell) order is higher (lower) than the lowest (highest) sell (buy) order, the price level is determined according to the currently displayed lowest (highest) sell (buy) order.

Designated trading
Local Chinese investors involved in the trading of B Shares at the SSE must commission orders via designated member in advance and this member is obliged to complete clearing and delivery.
Registration and amendment of designated trading for B Shares must be submitted through an application to clearing and registration institutions through respective clearing members, rather than designated trading instructions being directly reported to the SSE trading mainframe computer.
Applications for registration and amendment of designated transactions are generally effective after T+1.

Cross Trading and Turnaround Trading

Cross Trading
Cross trading is a transaction generated when a designated buyer and designated seller negotiate a price for the same securities at the same prices and quantities through a securities company. Cross trading is generally used for block trade orders of B Shares. Presently, the SSE has following operating provisions for the handling of cross trading.

1. The quantity of cross trading is generally controlled at more than 50,000 shares;
2. Pricing of cross trading is generally controlled between the highest and lowest price of the day. If there is just one price on a day, the cross price interval is between this price and the previous closing price. If there is no concluded transaction that day, the previous closing price is used as the cross price;
3. Cross trading orders must be placed by floor traders and can only be concluded after confirmation made by SSE floor supervisors according to the above principles. The time for the handling of orders is 15 minutes after the opening and before the closing of trading.

Turnaround trading
Turnaround trading is a trading method designed for B Shares since B-share trading uses a T+3 settlement system. In turnaround transactions, B shares that investors have placed orders to buy and that have been confirmed by the trading system but not settled and delivered can be fully or partially sold during the period from T+1 to T+3 prior to delivery. But whether buying or selling a share, investors can only handle settlement of these transactions on the third trading day after conclusion. Attention should be given to the following conditions when carrying out turnaround transactions:

1. If an investor has no stock shares balance, he can only sell shares after buying.
2. If an investor has a share balance of unconcluded delivery and settlement, he can sell this part of shares instead of selling after completion of delivery and settlement.
3. The total amount of stocks are an investor may sell at one time is equal to the balance of stocks already delivered and settled plus the balance of stocks not yet delivered and settled;
4. Stocks that investors have bought or sold on different trading days can only be cleared separately and cannot offset each other.
5. Transactions concluded on different trading days carry out settlement and delivery on the third trading day respectively after conclusion.
6. Turnaround trading can also be applied to Cross trading

Opening price and closing price
The opening price of B Shares refers to the first concluded price of the securities on that day. The opening price of B Shares is generated by centralized trading at group auction and this can not be generated, then it is generated by consecutive bidding. After an opening price is generated according to centralized bidding, unconcluded orders are still valid and automatically enter consecutive bidding according to the original sequence of orders.
The closing price of a certain B share refers to volume weighted average price of all trades in a minute before the last trading of this securities on that day (including the last trade).If there is no concluded transaction on that day, the previous closing price is used as the day's closing price.

Ex-rights and Ex-dividends Ex-dividend trading
As B Shares implement a T+3 settlement system, its operating method of ex-dividend trading is different from the operating method of A Shares under the T+1 system. Firstly, three dates and their significance should be clarified. They are the "last trading day'", "ex-dividend trading day" and "rights registration day".
The last trading day is the last day of trading of shares with cum-dividend. Ex-dividend trading day is trading day following the last trading day and the SSE will carry out ex-dividend procedures for the securities. Buying or holding shares before that day are cum-dividend shares. The third trading day of the last trading day is rights registration day and registration of investor share rights can be completed only on that day.
Ex-dividend quotation = closing price of last trading day- cash dividend per share

Ex-right trading
This is the same as ex-dividend trading, 3 dates have to be clarified for ex-right trading, i.e. last trading day, ex-right trading day and rights registration day. The calculation methods and principles for these 3 dates is the same as for ex-dividend trading. The calculation method of ex-right quotation is as follows:

Ex-right quotation for bonus shares = closing price of the last trading day / (1 + bonus share ratio)
Ex-right quotation for rights issue = (closing price of the last trading day + pricing of rights issue shares X rights issue ratio) / (1 + rights issue ratio)
Ex-right quotation for bonus shares and rights issue handled meantime = (closing price of the last trading day + pricing of rights issue X rights issue ratio) / (1+ rights issue ratio + bonus share ratio)
Ex-right and ex-dividend quotation for ex-dividends, rights issue and bonus share handled meantime = (closing price of the last trading day - cash dividend per share + pricing of rights issue X rights issue ratio) / (1 + bonus share ratio + rights issue ratio)

Warrants for Rights Issue Transaction
Many B Shares investors are overseas investors and the B shares are usually offered through private placements. But in the securities laws of many countries those private placed shares are defined as publicly offered share capital. Therefore, investors from many countries are unable to participate in the rights issues of B Shares listed companies. The establishment of warrant for rights issue is an important measure to safeguard the lawful rights and interests of overseas B Share investors.
Attention should be given to the following main points for rights issue warrants transaction:

1. After rights registration day, the share accounts of investors buying or holding shares before ex-right day will be cum the rights issue warrants according to the rights issue ratio, i.e., if the rights issue ratio is 2/10, then an account with 1000 shares in will be cum 200 warrants.
2. If the holder does not want to pay to get the rights issue, he can sell his warrants. The rights issue warrants can only be traded during a stipulated period, which last generally for 5-10 trading days;
3. If the investors with rights issue warrants want to have the rights shares, they can pay the corresponding sum for the rights issues within the prescribed period;
4. For investors wishing to obtain the rights shares, the receiving bank will send a notification to the investor according to the address the investor has given when opening a share trading account. After completing the application, investors should hand this to their designated clearing member and prepare sufficient funds for the placed shares inside their share accounts one day before the final day for payment. Their agents will transfer the payment due for the rights shares to the receiving bank on the last payment day.
5. Trading in the newly placed shares can only begin on the prescribed listing date of the new shares.
6. The theoretical price of placed shares = closing price of the last trading day - ex-rights quotation

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	Part 4 Trading Fees
	Trading Fees

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