It's about high-frequency trading! The three major exchanges in Shanghai, Shenzhen and North China issued implementation rules for the management of programmatic transactions

Zhitongcaijing · 04/03/2025 12:33

The Zhitong Finance App learned that on April 3, the Shanghai and Shenzhen North Stock Exchange issued the “Implementation Rules for Programmatic Transaction Management” and solicited comments on related supporting business rules. The “Implementation Rules” adhere to the regulatory goals of seeking profit and avoiding harm, highlighting fairness, strict supervision, and standardized development, and make detailed provisions on programmatic transaction report management, trading behavior management, information system management, high-frequency trading management, Shanghai Stock Connect management, supervision and inspection, etc.

In terms of identifying abnormal transactions, the “Implementation Rules” have been refined to clarify the components of four types of abnormal transactions: abnormal instantaneous reporting rates, frequent instantaneous withdrawals, frequent push-ups and suppression, and large-scale transactions in a short period of time.

Regarding the high-frequency transaction certification standards that the market is concerned about, the “Implementation Rules” clearly state that the maximum number of high-frequency transaction certification standards is 300 or more per second for a single account, or the maximum number of full-day declarations and withdrawals for a single account is 20,000 or more. The Shanghai and Shenzhen North Stock Exchange said that the setting of this standard drew on high-frequency transaction certification standards in mature overseas markets, combined with its own practical experience in supervision, and carried out thorough data calculation.

Earlier, the Shanghai and Shenzhen North Exchanges had formulated specific monitoring indicators for the above four types of stock programmatic aberrant trading behavior, and trial operation began in April 2024.

The Shanghai and Shenzhen North Exchange said that judging from the trial operation situation, the main trigger for the relevant indicators was to quantify institutional investors such as private equity and brokerage self-operated investors. There were basically no relevant situations among small and medium-sized individual investors, and investors' normal trading behavior would not be affected. Furthermore, during the trial operation, the exchange conducted inquiries and compliance trading education for investors who frequently triggered relevant indicators, and the transaction compliance of relevant investors improved markedly.

The “Implementation Rules” clearly state that according to the principle of unity between domestic and foreign investors, Shanghai and Shenzhen Stock Connect investors refer to relevant regulations such as applicable report management, trading behavior management, and high-frequency transaction management. Programmatic transaction supervision generally imposes regulatory standards consistent with domestic investment for Shanghai Stock Connect investors. For example, if Shanghai Stock Connect investors engage in abnormal trading behavior as stipulated in the “Implementation Rules”, the Shanghai and Shenzhen Stock Exchange will adopt self-regulatory management measures against investors in accordance with regulatory cooperation arrangements. At the same time, we will take into account the actual differences between the Mainland and Hong Kong markets and make adaptable arrangements.

The original text is as follows:

The Shanghai Stock Exchange answers reporters' questions on officially issuing implementation rules for programmatic trading management and soliciting comments on supporting business rules

On April 3, 2025, the Shanghai Stock Exchange officially issued the “Shanghai Stock Exchange Programmatic Trading Administration Implementation Rules” (hereinafter referred to as the “Implementation Rules”) and solicited comments on related supporting business rules. The relevant person in charge of the Shanghai Stock Exchange answered questions from reporters about the rule-making situation.

1. Please briefly introduce the background and general ideas of the formulation of the “Implementation Rules”.

A: On May 15, 2024, the Securities Regulatory Commission officially issued the “Regulations on the Administration of Programmatic Transactions in the Securities Market (Trial)” (hereinafter referred to as the “Administrative Regulations”), which make overall and framework institutional arrangements for the supervision of programmatic transactions in the securities market, and authorize exchanges to refine business rules and specific measures. In order to implement the various regulatory requirements put forward in the “Administrative Regulations”, the Shanghai Stock Exchange has formulated “Implementation Rules”, which make comprehensive and detailed regulations on matters such as programmatic transaction report management, trading behavior management, information system management, high-frequency trading management, Shanghai Stock Connect management, supervision and inspection, etc.

The “Implementation Rules” are based on the largest national market situation where “small and medium-sized investors account for the vast majority”. They aim to promote the development of programmatic trading standards through snobbish guidance, and fully reflect the general idea of “seeking profit and avoiding harm, highlighting fairness, strict supervision, and standardized development”. On the one hand, through arrangements such as a programmatic transaction reporting system, strengthening institutional compliance and risk control management, and strengthening information system management, etc., it clarifies regulatory expectations and promotes the standardized development of the programmatic trading industry. On the other hand, by strengthening programmatic transaction monitoring and monitoring and strengthening the supervision of high-frequency transactions, etc., transaction safety is better guaranteed, and the order of securities transactions and market fairness are maintained.

The “Implementation Rules” began to be officially implemented on July 7, 2025, to make adaptive adjustments, prepare technical preparations, and reserve a transition period for market players. Subsequently, under the guidance of the Securities Regulatory Commission, the firm will promote a package of detailed implementation measures to form a systematic and operable system of self-regulatory rules.

2. Earlier, the Shanghai Stock Exchange publicly solicited comments from the public on the “Implementation Rules”. Please explain the relevant circumstances of the consultation and market feedback.

A: During the public consultation period from June 7 to June 14, 2024, the Shanghai Stock Exchange received a total of 648 feedback. After sorting out and merging, there were 107 comments. Overall, it supported the promulgation of the “Implementation Rules”. Among the opinions and suggestions put forward, some have been absorbed and adopted, and the wording of the provisions has been improved; some of the comments are issues related to understanding the provisions, process consultation, etc., and the firm will conduct timely training and interpretation of the rules in the future.

3. The “Implementation Rules” stipulate four types of abnormal trading behavior. What are the considerations?

Answer: The “Implementation Rules” further refine the four types of abnormal programmatic transactions stipulated in the “Administrative Regulations” of the Securities Regulatory Commission, and clarified the components of the four types of abnormal transactions with abnormal instantaneous reporting rates, frequent instantaneous withdrawals, frequent push-ups and suppression, and large-scale transactions in a short period of time. The main considerations are as follows:

First, the instantaneous reporting rate is abnormal. Programmatic transactions, especially high-frequency transactions, often have a large reporting volume in a short period of time, and have a clear speed advantage over other investors. If procedural errors occur, causing a large number of consecutive erroneous orders, it may also affect the security of the firm's trading system. It is necessary to set corresponding indicators for supervision from the perspective of limiting the reporting rate to guide high-frequency transactions to reduce the reporting rate and reduce the impact on the transaction system.

Second, frequent and instantaneous cancellations of orders. Programmatic transactions, especially high-frequency transactions, can take advantage of technical advantages to frequently declare and withdraw orders in a short period of time. Transactions may not be solely aimed at transactions, affecting the normal trading order of the market. It is necessary to set corresponding indicators for supervision from the perspective of limiting frequent instantaneous order withdrawals to guide programmatic transaction investors to reduce the withdrawal rate and extend order retention time.

The third is frequent pulling and pressing. Currently, stock boosting and suppressing abnormal trading behavior mainly targets individual stock settings. Programmatic trading investors may slightly push and suppress multiple stocks, making it more difficult to touch the regulatory standards for abnormal trading in banks. However, such trading practices may consume short-term liquidity of individual stocks and cause rapid fluctuations in stock prices. It is necessary to set corresponding indicators for supervision from the perspective of limiting frequent increases and suppression to guide programmatic trading investors to properly distribute transactions and reduce the impact on individual stocks.

Fourth, large transactions in a short period of time. Products managed by the same agency manager may trigger the same trading signals when the market rises and falls sharply, causing a large number of products to concentrate in the same direction in a short period of time, which increases the risk of market fluctuations to a certain extent and is not conducive to the smooth operation of the market. It is necessary to carry out consolidated supervision of all products managed by a single agency over a short period of time to guide programmatic trading, especially quantitative agencies, to strengthen overall risk control and prevent centralized transactions from affecting the smooth operation of the market.

The Shanghai Stock Exchange has formulated specific monitoring indicators for the above four types of stock programmatic aberrant trading behavior, and trial operation will begin in April 2024. Judging from the trial operation situation, the main trigger for the relevant indicators was to quantify institutional investors such as private equity and brokerage firms. There were basically no relevant situations among small and medium-sized individual investors, and investors' normal trading behavior would not be affected. Furthermore, during the trial operation, the Shanghai Stock Exchange conducted inquiries and compliance trading education for investors who frequently triggered relevant indicators, and the transaction compliance of relevant investors improved markedly.

4. After the Shanghai Stock Exchange discovers that investors have made abnormal programmatic transactions, what measures will it take?

Answer: The “Implementation Rules” clearly stipulate that if an investor engages in programmatic abnormal trading behavior, the Shanghai Stock Exchange may take the following measures: First, take corresponding self-regulatory measures or disciplinary action against them in accordance with the provisions of the relevant business rules of the firm. Second, for programmatic trading investors whose transactions have been restricted by the firm due to repeated abnormal transactions within a month, their designated trading members are required to suspend their use of the firm's hosting resources. Third, where investors in programmatic trading are suspended or investor account transactions are restricted due to abnormal trading behavior, the relevant dispatching agencies of the China Securities Regulatory Commission, the Securities Industry Association, the Fund Industry Association, etc. are notified as appropriate, and they are requested to cooperate to take measures such as on-site inspections, interviews, and reminders.

5. What are the considerations in the “Implementation Rules” regarding the certification criteria for high-frequency transactions?

A: During the public consultation period, high-frequency transaction certification standards received widespread attention from the market. The “Implementation Rules” specify that the criteria for identifying high-frequency transactions are: the maximum total number of declarations and cancellations per second for a single account is 300 or more, or the total number of full-day declarations and withdrawals for a single account reaches 20,000 or more. The Shanghai Stock Exchange set this standard, drawing on high-frequency transaction certification standards in mature overseas markets, combined with its own practical experience in supervision, and carried out thorough data calculation. The main considerations are as follows:

The first is to focus on key points and focus on practical results. Judging from overseas experience and regulatory practice, due to the high technical threshold, the number of investors in high-frequency trading is small, but due to the high frequency and volume of transactions, the market influence is great. On the basis of thorough calculation and evaluation, the Shanghai Stock Exchange sets standards for high-frequency transactions, which is conducive to focusing on key groups, concentrating supervisory resources, and effectively implementing the effectiveness of supervision.

Second, it has outstanding characteristics and is easy to implement. High-frequency transaction certification standards are the basis for market players to judge their own behavior. They should not be too complicated; they should be understandable and operable in practice. Flow rate (reporting rate per second) and traffic (number of declarations per day) most directly reflect the characteristics of high-frequency transactions. They also reflect the impact of high-frequency transactions on exchange system security and market order. Using these two factors as criteria for determining high-frequency transactions, they are easy to understand and execute.

Third, there is an orderly connection and continuous improvement. The programmatic transaction reporting system established earlier has made targeted arrangements for high-frequency transactions, and exchanges are also focusing on transaction monitoring. The “Implementation Rules” follow the relevant standards and are in an orderly manner linked to the reporting system established earlier. At the same time, the “Implementation Rules” also stipulate that exchanges may adjust the certification situation and differentiated management requirements for high-frequency transactions. In the future, the Shanghai Stock Exchange will continue to do a good job of monitoring and monitoring, evaluate the management of high-frequency transactions, and make continuous improvements in accordance with supervisory practices.

6. What are the differentiated supervisory arrangements for high-frequency transactions in the “Implementation Rules”?

A: The “Implementation Rules” further strengthen the supervision of high-frequency transactions from the following aspects. The first is to urge relevant investors to fulfill additional reporting obligations. Starting from maintaining the security of the exchange system, investors with high-frequency trading situations are required to additionally report information such as high-frequency trading system server locations, system test reports, and system failure contingency plans on the basis of fulfilling general reporting requirements in accordance with the “Implementation Rules” and the previous notice regulations on programmatic transaction reports. If the requirements related to system testing and emergency plans are not implemented, and a system failure affects the safety or normal trading order of the exchange system, the Shanghai Stock Exchange will strictly adopt supervisory measures. The second is to set standards for the supervision of abnormal transactions in a targeted manner. In response to the characteristics of high frequency transaction reporting rate and high frequency of withdrawal, standards for abnormal transactions such as abnormal instantaneous declaration rates and frequent instantaneous cancellations have been set to strengthen guidance and restraint on high-frequency transactions. The third is to strengthen transaction supervision. If investors engage in high-frequency transactions and have abnormal trading behavior, the firm may strictly adopt self-regulatory management measures in accordance with regulations, and require members to strengthen the management of relevant customer trading behavior.

Fourth, differentiated charges. Formulate differentiated fee plans in a timely manner. Based on high-frequency transaction certification standards, investors with high-frequency transaction situations are charged higher fees such as traffic fees and cancellation fees based on their actual transaction situation. Through market-based adjustment methods, high-frequency transactions are guided to actively reduce transaction frequency and standardize trading behavior. Relevant standards and plans will be formulated and introduced in due course under the unified guidance of the Securities Regulatory Commission.

7. How to apply the “Implementation Rules” to Shanghai Stock Connect investors' programmatic transactions?

Answer: Article 38 of the “Implementation Rules” stipulates that according to the principle of unity between domestic and foreign investment, Shanghai Stock Connect investors refer to relevant regulations such as applicable report management, trading behavior management, and high-frequency transaction management. Programmatic transaction supervision generally imposes regulatory standards consistent with domestic capital for Shanghai Stock Connect investors. For example, if Shanghai Stock Connect investors engage in abnormal trading behavior as stipulated in Article 18 of the “Implementation Rules”, the firm will take self-regulatory management measures against the investors in accordance with the Shanghai-Hong Kong Stock Connect supervisory cooperation arrangements. At the same time, it takes into account the actual differences between the mainland and Hong Kong markets and makes adaptable arrangements. For example, the provisions of Article 19 of the “Implementation Rules” on institutional compliance risk control management requirements and Article 42 on on-site off-site inspections of relevant entities will be implemented in accordance with the framework of the Shanghai-Hong Kong Stock Exchange Supervisory Cooperation Arrangement.

Furthermore, in order to clarify the specific operation of Shanghai Stock Connect investors' programmatic transaction reports, the Shanghai Stock Exchange drafted the “Shanghai Stock Exchange Securities Trading Rules Application Guidelines No. 2 - Shanghai Stock Exchange Investor Programmatic Transaction Report (Consultation Draft)” (hereinafter referred to as the “Report Guidelines”) to solicit comments from the market in accordance with the principle of domestic and foreign agreement. The “Reporting Guidelines” make detailed provisions on specific matters such as reporting subjects, reporting methods, and reporting information, and reserve sufficient transition periods for stock investors to ensure the smooth implementation of the Shanghai Stock Connect procedural transaction reporting system.

8. After the “Implementation Rules” are officially implemented, how are they linked to the report notice issued earlier?

A: There is no conflict between the “Notice of the Shanghai Stock Exchange on Matters Relating to Programmatic Stock Transaction Reporting” and the “Notice of the Shanghai Stock Exchange on Matters Relating to Programmatic Transaction Reporting of Convertible Corporate Bonds” issued earlier and the “Implementation Rules”, and they continue to provide specific guidelines for market-related entities to fulfill their reporting obligations. The Shanghai Stock Exchange will continue to study and improve the programmatic transaction reporting system based on actual market operations, integrate the contents of the revised notice in due course and release it to the market.

Shenzhen Stock Exchange answers reporters' questions on issuing the “Shenzhen Stock Exchange Programmatic Trading Administration Implementation Rules” and related supporting rules

In order to strengthen the supervision of programmatic transactions in the securities market, promote the development of procedural trading standards, and maintain stock trading order and market fairness, on April 3, 2025, according to the unified deployment of the China Securities Regulatory Commission, the Shenzhen Stock Exchange officially issued the “Shenzhen Stock Exchange Programmatic Trading Administration Implementation Rules” (hereinafter referred to as the “Implementation Rules”) and solicited comments on relevant supporting business rules. The relevant person in charge of the Shenzhen Stock Exchange answered questions from reporters about the rule-making situation.

1. Please briefly introduce the background and general idea of the formulation of the “Implementation Rules”.

A: On May 15, 2024, the China Securities Regulatory Commission officially issued the “Regulations on the Administration of Programmatic Transactions in the Securities Market (Trial)” (hereinafter referred to as the “Administrative Regulations”), which make overall and framework institutional arrangements for the supervision of programmatic transactions in the securities market, and authorize exchanges to refine business rules and specific measures. In order to implement the requirements of the “Administrative Regulations”, the Shenzhen Stock Exchange has formulated “Implementation Rules”, which make comprehensive and detailed regulations on matters such as programmatic transaction report management, trading behavior management, information system management, high-frequency transaction management, Shenzhen Stock Connect management, supervision and inspection, etc.

The “Implementation Rules” are based on the largest national market situation where “small and medium-sized investors account for the vast majority”. They aim to promote the development of programmatic trading standards through snobbish guidance, and fully reflect the general idea of “seeking profit and avoiding harm, highlighting fairness, strict supervision, and standardized development”. On the one hand, through arrangements such as establishing a programmatic transaction reporting system, strengthening institutional compliance risk control management, and strengthening information system management, etc., it clarifies expectations for procedural transaction supervision and promotes the development of programmatic transaction standards. On the other hand, by strengthening programmatic transaction monitoring and monitoring and strengthening the supervision of high-frequency transactions, etc., transaction safety is better guaranteed, and the order of securities transactions and market fairness are maintained.

The “Implementation Rules” began to be officially implemented on July 7, 2025, to reserve time for market players to make adaptive adjustments and prepare technical preparations. Subsequently, under the guidance of the Securities Regulatory Commission, the firm will urgently push forward a package of detailed implementation measures to form a systematic and operable system of self-regulatory rules.

2. What is the status of soliciting comments on the “Implementation Rules”?

A: Earlier, the Shenzhen Stock Exchange publicly solicited comments from the public on the “Implementation Rules” and actively listened to opinions and suggestions from domestic and foreign investors and market institutions through discussions and research. All parties in the market paid close attention and actively made suggestions and suggestions. A total of more than 500 feedbacks were received. After sorting out and merging, there were 69 articles. Feedback from all parties was generally positive, believing that the “Implementation Rules” responded to market concerns and supported the introduction of the “Implementation Rules”. The Shenzhen Stock Exchange has carefully sorted out and summarized the feedback, studied and classified them one by one. Some opinions have been absorbed and adopted, and the wording of the terms and conditions has been improved; some opinions are issues related to understanding the terms, process consultation, etc., and the Shenzhen Stock Exchange will conduct timely training and interpret the rules in the future.

3. The “Implementation Rules” refine four types of abnormal trading behavior. What are the factors to consider?

Answer: The “Implementation Rules” further refine the four types of abnormal programmatic transactions in the “Administrative Regulations”, and clarify the components of the four types of abnormal transactions with abnormal instantaneous reporting rates, frequent instantaneous withdrawals, frequent push-ups and suppression, and large-scale transactions in a short period of time. The main considerations are as follows:

First, the instantaneous reporting rate is abnormal. Programmatic transactions, especially high-frequency transactions, often have a large reporting volume in a short period of time, and have a clear speed advantage over other investors. If procedural errors occur, causing a large number of consecutive erroneous orders, it may also affect the security of the exchange trading system. Therefore, it is necessary to set corresponding indicators for supervision from the perspective of limiting the reporting rate to guide high-frequency transactions to reduce the reporting rate and reduce the impact on the transaction system.

Second, frequent and instantaneous cancellations of orders. Programmatic transactions, especially high-frequency transactions, can take advantage of technical advantages to frequently declare and withdraw orders in a short period of time. Transactions are not entirely aimed at transactions, and may have false reporting intentions, affecting the normal trading order of the market. Therefore, it is necessary to set corresponding indicators for supervision from the perspective of limiting frequent instantaneous order withdrawals to guide programmatic transaction investors to reduce the withdrawal rate and extend order retention time.

The third is frequent pulling and pressing. Programmatic trading investors may carry out small acts of pushback on multiple stocks, which may consume short-term liquidity of individual stocks and cause rapid fluctuations in stock prices. Therefore, it is necessary to set corresponding indicators for supervision from the perspective of limiting frequent increases and suppression to guide programmatic trading investors to properly distribute transactions and reduce the impact on individual stocks.

Fourth, large transactions in a short period of time. Products managed by the same agency manager may trigger the same trading signals when the market rises and falls sharply, causing a large number of products to concentrate in the same direction in a short period of time, which increases the risk of market fluctuations to a certain extent and is not conducive to the smooth operation of the market. Therefore, it is necessary to carry out consolidated supervision of all products managed by a single agency over a short period of time to guide programmatic transactions, especially quantitative agencies, to strengthen overall risk control and prevent centralized transactions from affecting the smooth operation of the market.

The Shenzhen Stock Exchange has formulated specific monitoring indicators for the above four types of stock programmatic aberrant trading behavior, and trial operation will begin in April 2024. Judging from the trial operation situation, the main trigger for the relevant indicators was to quantify institutional investors such as private placement and brokerage firms. Basically, small and medium-sized individual investors were not involved, and investors' normal trading behavior would not be affected. In addition, during the trial operation, the Shenzhen Stock Exchange made telephone inquiries and compliance transaction reminders to investors who frequently triggered relevant indicators, and the relevant investors' transaction compliance improved markedly.

4. After the Shenzhen Stock Exchange discovers that investors have made abnormal programmatic transactions, what measures will it take?

Answer: The “Implementation Rules” clearly stipulate that if investors engage in programmatic abnormal trading behavior, the Shenzhen Stock Exchange may take the following measures: First, take corresponding self-regulatory measures or disciplinary action against them in accordance with the relevant business rules. Second, for programmatic trading investors whose post-market trading restrictions have been imposed due to repeated abnormal trading behavior within a month, their escrow members are required to suspend their use of Shenzhen Stock Exchange hosting resources. Third, investors in programmatic transactions are subject to trade restrictions due to abnormal trading behavior. Depending on the situation, they notify agencies dispatched by the China Securities Regulatory Commission, the Securities Industry Association, the Fund Industry Association, etc., and ask them to cooperate to take measures such as on-site inspections, interviews, and reminders.

5. What are the “Implementation Rules” considering the certification criteria for high-frequency transactions?

A: During the public consultation period, high-frequency transaction certification standards received widespread attention from the market. The “Implementation Rules” clearly state that the criteria for identifying high-frequency transactions are: the maximum number of declarations and cancellations per second for a single account is 300 or more, or the maximum number of full-day declarations and withdrawals for a single account is 20,000 or more. The Shenzhen Stock Exchange established this standard drawing on high-frequency transaction certification standards in mature overseas markets, combined with its own practical experience in supervision, and carried out thorough data calculation. Specific considerations are as follows:

The first is to focus on key points and focus on practical results. Judging from overseas experience and regulatory practices, due to certain technical thresholds, the number of investors in high-frequency transactions is small, but due to the high frequency and volume of transactions, the market influence is great. Combining daily regulatory practices, the Shenzhen Stock Exchange sets high-frequency transaction certification standards on the basis of thorough calculation, evaluation and verification, which helps to focus on key groups, concentrate supervision resources, and effectively implement the effectiveness of supervision.

Second, it has outstanding characteristics and is easy to implement. In order to guide market players to more accurately judge and regulate their own behavior, high-frequency transaction certification standards should not be complicated; they should be understandable and operable. Flow rate (reporting rate per second) and traffic (number of declarations per day) most directly reflect the characteristics of high-frequency transactions. They also reflect the impact of high-frequency transactions on exchange system security and market order. Using these two factors as criteria for determining high-frequency transactions, they are easy to understand and execute.

Third, there is an orderly connection and continuous improvement. The programmatic transaction reporting system established earlier has made targeted arrangements for high-frequency transactions, and exchanges are also focusing on transaction monitoring. The “Implementation Rules” follow the relevant standards and are in an orderly manner linked to the reporting system established earlier. At the same time, the “Implementation Rules” also stipulate that exchanges may adjust the certification situation and differentiated management requirements for high-frequency transactions. In the future, the Shenzhen Stock Exchange will continue to do a good job of monitoring and monitoring, evaluate the management of high-frequency transactions, and make continuous improvements in accordance with regulatory practices.

6. What are the differentiated supervisory arrangements for high-frequency transactions in the “Implementation Rules”?

A: After the “Implementation Rules” are officially released, the Shenzhen Stock Exchange will further strengthen the supervision of high-frequency trading in the following areas.

The first is to urge relevant investors to fulfill additional reporting obligations. Starting from maintaining the security of the exchange system, investors with high-frequency trading situations are required to additionally report information such as high-frequency trading system server locations, system test reports, and system failure contingency plans on the basis of fulfilling general reporting requirements in accordance with the “Implementation Rules” and the notice regulations on programmatic transaction reports issued earlier. If the requirements related to system testing and emergency plans are not implemented, and a system failure affects the safety or normal trading order of the exchange system, the Shenzhen Stock Exchange will strictly adopt supervisory measures.

The second is to set standards for the supervision of abnormal transactions in a targeted manner. In response to the characteristics of high frequency transaction reporting rate and high frequency of withdrawal, standards for abnormal transactions such as abnormal instantaneous declaration rates and frequent instantaneous cancellations have been set to strictly set indicator monitoring thresholds to strengthen guidance and restraint on high-frequency transaction behavior.

The third is to strengthen transaction supervision. If investors engage in high-frequency transactions and have abnormal trading behavior, the Shenzhen Stock Exchange may strictly and seriously adopt self-regulatory management measures in accordance with regulations, and require members to strengthen the management of relevant customer trading behavior.

Fourth, implement differentiated charges. In the next step, the Shenzhen Stock Exchange will study and formulate differentiated fee plans in due course. Based on high-frequency transaction certification standards, investors with high-frequency trading situations will be charged higher fees such as traffic fees and cancellation fees based on their actual transaction situation. Through market-based adjustment methods, high-frequency trading will be guided to actively reduce the frequency of transactions and standardize trading behavior. Relevant standards and plans will be formulated and introduced in due course under the unified guidance of the Securities Regulatory Commission.

7. How do Shenzhen Stock Connect investors apply the “Implementation Rules”? What are the specific arrangements for the future?

Answer: Article 38 of the “Implementation Rules” stipulates that according to the principle of unity between domestic and foreign investment, Shenzhen Stock Connect investors refer to relevant regulations such as applicable report management, trading behavior management, and high-frequency transaction management. Programmatic transaction supervision generally imposes regulatory standards consistent with domestic investors. For example, if Shenzhen Stock Connect investors engage in abnormal trading behavior as stipulated in Article 18 of the “Implementation Rules”, the Shenzhen Stock Exchange will take self-regulatory management measures against the investors in accordance with the Shenzhen-Hong Kong Stock Connect regulatory cooperation arrangements. At the same time, it takes into account the actual differences between the mainland and Hong Kong markets and makes adaptable arrangements. For example, the provisions of Article 19 of the “Implementation Rules” on institutional compliance and risk control management requirements, and section 42 on on-site and off-site inspections of relevant entities will be implemented with reference to the framework of the Shenzhen-Hong Kong Stock Connect Supervisory Cooperation Arrangement.

Furthermore, in order to clarify the specific operation of Shenzhen Stock Connect investors' programmatic transaction reports, the Shenzhen Stock Exchange drafted the “Shenzhen Stock Exchange Securities Trading Business Guidelines No. 3 - Shenzhen Stock Connect Investor Programmatic Trading Report (Draft for Comments)” (hereinafter referred to as the “Shenzhen Stock Connect Report Guidelines”) to solicit comments from the market in accordance with the principle of domestic and foreign agreement. The “Shenzhen Stock Connect Reporting Guidelines” make detailed provisions on specific matters such as reporting subjects, reporting methods, and report information, and reserve sufficient transition periods for stock investors to ensure the smooth implementation of the Shenzhen Stock Connect procedural transaction reporting system.

8. How to deal with subsequent reporting notices on stocks and convertible bonds issued earlier?

A: The “Notice of the Shenzhen Stock Exchange on Matters Relating to Programmatic Stock Transaction Reporting” and the “Notice of the Shenzhen Stock Exchange on Matters Relating to Programmatic Transaction Reporting of Convertible Corporate Bonds” issued earlier continue to provide specific guidelines for market-related entities to fulfill their reporting obligations. The Shenzhen Stock Exchange will continue to study and improve the programmatic transaction reporting system in accordance with the relevant requirements of the “Administrative Regulations” and “Implementation Rules”, taking into account the actual operation of the market, and integrate the revised notices in due course and release them to the market.

The Beijing Stock Exchange answers reporters' questions on the official release of the implementation rules for the management of programmatic transactions

On April 3, 2025, the Beijing Stock Exchange (hereinafter referred to as the Beijing Stock Exchange) officially issued the “Beijing Stock Exchange Programmatic Trading Administration Implementation Rules” (hereinafter referred to as the “Implementation Rules”). The relevant person in charge of the Beijing Stock Exchange answered questions from reporters about the rule-making situation.

1. Please briefly introduce the background and general idea of the formulation of the “Implementation Rules”.

A: On May 15, 2024, the China Securities Regulatory Commission officially issued the “Regulations on the Administration of Programmatic Transactions in the Securities Market (Trial)” (hereinafter referred to as the “Administrative Regulations”), which make overall and framework institutional arrangements for the supervision of programmatic transactions in the securities market, and authorize exchanges to refine business rules and specific measures. In order to implement the various supervisory requirements put forward in the “Administrative Regulations”, the Beijing Stock Exchange has formulated “Implementation Rules”, which make comprehensive and detailed regulations on matters such as programmatic transaction report management, trading behavior management, information system management, high-frequency transaction management, supervision and inspection, etc.

The “Implementation Rules” are based on the largest national market situation where small and medium-sized investors account for the vast majority. They aim to promote the development of programmatic trading standards through snobbery, and fully reflect the general idea of “seeking profit and avoiding harm, highlighting fairness, strict supervision, and standardized development”. On the one hand, through arrangements such as a programmatic transaction reporting system, strengthening institutional compliance risk control management, and strengthening information system management, etc., it clarifies regulatory expectations and promotes the development of programmatic transaction standards. On the other hand, by strengthening programmatic transaction monitoring and monitoring and strengthening the supervision of high-frequency transactions, etc., transaction safety is better guaranteed, and the order of securities transactions and market fairness are maintained.

The “Implementation Rules” began to be officially implemented on July 7, 2025, to make adaptive adjustments, prepare technical preparations, and reserve a transition period for market players. Subsequently, under the guidance of the China Securities Regulatory Commission, the Beijing Stock Exchange will push forward a package of detailed implementation measures to form a systematic and operable system of self-regulatory rules.

2. Earlier, the Beijing Stock Exchange publicly solicited comments from the public on the “Implementation Rules”. Please explain the relevant circumstances of the consultation.

A: From June 7 to June 14, 2024, the Beijing Stock Exchange publicly solicited comments on the “Implementation Rules”. During this period, it received nearly 50 feedback. After sorting out and merging, there were 45 comments. Overall, it supported the promulgation of the “Implementation Rules”. Among the opinions and suggestions put forward, some have been absorbed and adopted, and the wording of the provisions has been improved; some of the comments are issues related to understanding the provisions, process consultation, etc., and the firm will conduct timely training and interpretation of the rules in the future.

3. The “Implementation Rules” stipulate four types of abnormal trading behavior. What are the considerations?

Answer: The “Implementation Rules” further refine the four types of abnormal programmatic transactions stipulated in the “Administrative Regulations” of the China Securities Regulatory Commission, and clarified the components of the four types of abnormal transactions with abnormal instantaneous reporting rates, frequent instantaneous withdrawals, frequent push-ups and suppression, and large-scale transactions over a short period of time. The main considerations are as follows:

First, the instantaneous reporting rate is abnormal. Programmatic transactions, especially high-frequency transactions, often have a large reporting volume in a short period of time, and have a clear speed advantage over other investors. If procedural errors occur, causing a large number of consecutive erroneous orders, it may also affect the security of the exchange system. It is necessary to set corresponding indicators for supervision from the perspective of limiting the reporting rate to guide high-frequency transactions to reduce the reporting rate and reduce the impact on the transaction system.

Second, frequent and instantaneous cancellations of orders. Programmatic transactions, especially high-frequency transactions, can take advantage of technical advantages to frequently declare and withdraw orders in a short period of time. Transactions may not be solely aimed at transactions, affecting the normal trading order of the market. It is necessary to set corresponding indicators for supervision from the perspective of limiting frequent instantaneous order withdrawals to guide programmatic transaction investors to reduce the withdrawal rate and extend order retention time.

The third is frequent pulling and pressing. Programmatic trading investors may carry out small acts of pushback on multiple stocks, which may consume short-term liquidity of individual stocks and cause rapid fluctuations in stock prices. It is necessary to set corresponding indicators for supervision from the perspective of limiting frequent increases and suppression to guide programmatic trading investors to properly distribute transactions and reduce the impact on individual stocks.

Fourth, large transactions in a short period of time. Programmatic trading accounts under the name or actual control of investors may trigger the same trading signals when the market rises and falls sharply, leading to concentrated same-direction trading in a short period of time, which increases the risk of market fluctuations to a certain extent and is not conducive to the smooth operation of the market. It is necessary to supervise the centralized trading situation of programmatic investors in a short period of time, guide them to strengthen overall risk control, and prevent centralized transactions from affecting the smooth operation of the market.

Earlier, the Beijing Stock Exchange has formulated relevant monitoring indicators for the above abnormal trading behavior, and trial operation will begin in April 2024. Judging from the trial operation situation, the relevant standards are generally in line with the current reality of the Beijing Stock Exchange. They are highly targeted and effective for programmatic transactions, especially high-frequency transactions, and investors' normal trading behavior will not be affected.

4. After the Beijing Stock Exchange discovers that investors have made abnormal programmatic transactions, what measures will it take?

Answer: The “Implementation Rules” clearly stipulate that if investors engage in abnormal programmatic transactions, the Beijing Stock Exchange may take the following measures: First, take corresponding self-regulatory measures or disciplinary action against them in accordance with the relevant business rules. Second, if investors are suspended or restricted from trading in securities accounts due to abnormal programmatic transactions, they will notify agencies dispatched by the China Securities Regulatory Commission, the Securities Industry Association, the Fund Industry Association, etc. as appropriate, and they are requested to cooperate to take measures such as on-site inspections, interviews, and reminders.

5. What are the considerations in the “Implementation Rules” regarding the certification criteria for high-frequency transactions?

A: During the public consultation period, high-frequency transaction certification standards received widespread attention from the market. The “Implementation Rules” specify that the criteria for identifying high-frequency transactions are: the maximum total number of declarations and cancellations per second for a single account is 300 or more, or the total number of full-day declarations and withdrawals for a single account reaches 20,000 or more. The Beijing Stock Exchange set this standard, drawing on high-frequency transaction certification standards in mature domestic and foreign markets, combined with its own practical experience in supervision, and carried out thorough data calculation. The main considerations are as follows:

The first is to focus on key points and focus on practical results. Judging from overseas experience and other domestic market supervision practices, due to the high technical threshold, the number of investors in high-frequency trading is small, but due to the high frequency and volume of transactions, the market influence is great. The accreditation standards stipulated in the “Implementation Rules” are conducive to focusing on key groups, concentrating supervisory resources, and effectively implementing the effectiveness of supervision.

Third, there is an orderly connection and continuous improvement. The programmatic transaction reporting system established earlier has made targeted arrangements for high-frequency transactions, and exchanges are also focusing on transaction monitoring. The “Implementation Rules” follow the relevant standards and are in an orderly manner linked to the reporting system established earlier. At the same time, the “Implementation Rules” also stipulate that exchanges may adjust the certification situation and differentiated management requirements for high-frequency transactions. In the future, the Beijing Stock Exchange will continue to do a good job of monitoring and monitoring, evaluate the management of high-frequency transactions, and make continuous improvements in accordance with supervisory practices.

6. What are the differentiated supervisory arrangements for high-frequency transactions in the “Implementation Rules”?

A: The “Implementation Rules” further strengthen the supervision of high-frequency transactions from the following aspects.

The first is to urge relevant investors to fulfill additional reporting obligations. Starting from maintaining the security of the exchange system, investors with high-frequency trading situations are required to additionally report information such as high-frequency trading system server locations, system test reports, and system failure contingency plans on the basis of fulfilling general reporting requirements in accordance with the “Implementation Rules” and the previous notice regulations on programmatic transaction reports. If the requirements related to system testing and emergency plans are not implemented, and if a system failure affects the safety or normal trading order of the exchange system, the Beijing Stock Exchange will strictly adopt supervisory measures.

The second is to set standards for the supervision of abnormal transactions in a targeted manner. In response to characteristics such as the large number of programmatic transaction declarations and the large number of stocks traded, etc., standards to supervise abnormal transactions such as frequent push-ups and suppression, and large-scale transactions in a short period of time have been set to strengthen guidance and restraint on high-frequency trading behavior.

The third is to strengthen transaction supervision. If investors engage in high-frequency transactions and have abnormal trading behavior, the Beijing Stock Exchange may strictly and seriously adopt self-regulatory management measures in accordance with regulations, and require members to strengthen the management of relevant customer trading behavior.

7. After the “Implementation Rules” are officially implemented, how are they linked to the report notice issued earlier?

The “Notice Concerning Matters Relating to Programmatic Stock Transaction Reporting” issued earlier does not conflict with the content of the “Implementation Rules”, and continues to provide specific guidelines for market-related entities to fulfill their reporting obligations. The Beijing Stock Exchange will continue to study and improve the programmatic transaction reporting system based on actual market operations, revise the contents of the notice in due course, and release it to the market.

This article was compiled from the WeChat accounts of the Shanghai, Shenzhen and North Exchanges. Zhitong Finance Editor: Xu Wenqiang.