Interpretation Of The Stock Market: The Rise And Fall Limit System Is Flawed, And Improving Liquidity Is The King'S Way

The "Oolong Finger" incident occurred on a deal of an agreement on the New Third Board, which attracted the attention of all sectors of the market. This is not only because the party who misoperated lost a large amount of money in an instant, but also because this event reminded the market itself of the trading risk without the price limit system. As a result, the regulatory authorities took urgent action and soon made changes to the negotiated transaction system: set a trading limit of 200% up and 50% down. As we all know, Shanghai and Shenzhen stock markets did not have a price limit system. At the end of 1994, as an important measure to stabilize the market order and curb excessive speculation at that time, it began to implement measures to limit abnormal price fluctuations of common stocks by 10% and ST stocks by 5%. For more than 20 years, although some people have occasionally proposed to cancel price limit However, it has not received any response from the relevant parties and has not become the focus of the market.

After the establishment of the New Third Board, considering the existence of "over-the-counter factors" in its trading activities, and recognizing the rationality of "over-the-counter factors" to a certain extent, there is no price limit system set in the negotiated transaction mode. It has been calculated that over the years, there are probably less than 100 listed companies whose share prices rose by more than 200% or fell by more than 50% compared with the previous trading day, which is not a high proportion. Therefore, it is generally believed that setting the corresponding price limit system in the NEEQ's negotiated transaction mode will not have too much impact on the market. On the contrary, it plays a certain role in avoiding the misoperation of buyers and sellers, as well as restraining the behavior of manipulating stock prices.

However, from Marketization From the perspective of, the price limit system is flawed. Huishan Dairy, which was listed in Hong Kong this time, was affected by some factors, and its share price plummeted by 85% within one day. From the operational level, because there is no limit system, the stock still maintains a certain liquidity during the decline, which can make some investors out. Otherwise, if there is a limit on the price limit, I'm afraid there may be multiple "one word boards", so investors will have to face the risk of liquidity loss, leading to greater losses.

What needs to be discussed here is how to deal with the abnormal fluctuation of stock price in the case of misoperation. In fact, the probability of such a situation is usually not high, and generally speaking, it is mainly through improving the sense of responsibility of operators and strengthening background supervision that the phenomenon of "Wulong Finger" can be reduced to a minimum. If the price limit system is set for the whole transaction only to effectively control the market risk caused by occasional misoperation, then maybe this cost The flowers are a little big. In fact, the best way to deal with the impact on the market caused by the trading of own dragon fingers, or abnormal trading, is to effectively improve the liquidity of the market, because the stock price is not easy to fluctuate abnormally when there are many orders.

The main reason why the "Oolong Finger" incident occurred on the NEEQ was so serious was that the liquidity of the relevant stocks was too poor and there were few orders in the trading order. Such a small transaction could cause sharp fluctuations in the stock price. If the liquidity is better, at least the situation will not be so extreme. Of course, technical measures such as sending out early warning signals can also be taken to remind traders to place orders carefully when the deviation from the normal quotation is far away. But fundamentally, it is still to improve liquidity. With the corresponding order, it is not only conducive to the formation of market-oriented prices, but also can avoid abnormal transactions. In other words, we should solve the problems in the market by means of marketization.

At present, the biggest problem faced by NEEQ is insufficient liquidity, so many listed companies are considering "escaping" from NEEQ. Although the relevant departments are also trying to resolve the liquidity dilemma through institutional innovation, this process should be well accelerated. The appearance of "Oolong Finger" phenomenon, in fact, also warns people to make great efforts to improve the liquidity of NEEQ. Setting up the price limit system is certainly conducive to controlling the risk of the black fingers, but in a broader perspective, it is not necessarily the best option, because improving liquidity so that the shares listed for trading can be bought and sold for investors is the root of the problem.

For more information, please pay attention to the report of World Clothing, Shoes and Hats Network.