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

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

The China Securities Regulatory Commission (CSRC) has approved the first batch of STAR market makers, officially launching the market maker trading business of stocks on the STAR Market today.

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

A recent report by Financial Times suggested that there is a tendency among Chinese companies ahead of the IPO to look at listings in China instead of in Hong Kong or the United States.

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In the first half of 2022, IPOs in Chinese stock markets (at nearly US$35 billion) raised more than double the amount on Wall Street ($16 billion), and much of the fundraising was in the Star Market, focusing on companies on the area of ​​renewable energy, semiconductors and other high-end manufacturing.

A capital market with Chinese characteristics

The SSE, China Securities Finance Corporation Limited and China Securities Depository and Clearing Corporation Limited jointly issued the Detailed Rules for Market Making and Securities Lending Business on the STAR Market, which took effect from the date of publication.

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The market-making and securities lending business on the STAR market aims to promote the market-making mechanism to fully utilize its market function, actively expand the security resource of market-making affairs, and ensure the smooth operation of the market-making stock trading business the STAR market.

The introduction of a market maker mechanism on the STAR market is an important measure to improve the basic system of the capital market and further play the role of “lead zone” of STAR market reform.

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Market making helps to improve the liquidity of stocks, release market vitality and improve market resilience, as well as reduce transaction costs and improve market price efficiency.

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

The China Securities Regulatory Commission will supervise the market-making trading business of shares on the STAR market and improve relevant supporting mechanisms.

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