Market making business live on China’s Nasdaq equivalent, STAR

Market building on the STAR market will help create a capital market with Chinese characteristics, the regulator said.

The China Securities Regulatory Commission (CSRC) has approved the first group of STAR market makers to officially start stock market making business on the STAR market today.

The STAR Market is a science and technology-focused Chinese stock market established on July 22, 2019, officially known as the Science and Technology Innovation Board of the Shanghai Stock Exchange. It is touted as Shanghai’s equivalent of America’s Nasdaq.

A recent report from the Financial Times notes that there is a tendency among Chinese companies to seek listings in mainland China rather than Hong Kong or the United States before IPOs.

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In the first half of 2022, IPOs in China’s stock markets (almost $35 billion) raised more than double the amount raised on Wall Street ($16 billion), with much of the fundraising taking place on the Star Market, focusing on companies. in the areas of renewable energy resources, semiconductors and other high-end manufacturing.

Capital market with Chinese characteristics

The SSE, China Securities Finance Corporation Limited and China Securities Depository and Clearing Corporation Limited jointly issued detailed regulations on market making and securities lending on the STAR market, effective from the date of publication.

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The purpose of the market making and securities lending business in the STAR market is to promote the market maintenance mechanism in order to fully utilize its market function, actively expand the securities resources of the market making business and ensure the smooth operation of trading transactions forming the stock market. STAR market.

The introduction of the market maker mechanism in the STAR market is an important measure for improving the basic system of the capital market and for the further operation of the “pilot zone” of the STAR market reform.

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Market making helps improve stock liquidity, release market vitality and improve market resilience, as well as reduce transaction costs and improve market pricing efficiency.

It is believed that the introduction of market making promotes the high-quality development of the STAR market and creates a capital market with Chinese characteristics.

The China Securities Regulatory Commission will provide supervision of stock market-making transactions on the STAR market and improve relevant support mechanisms.

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