Bourse implements new price system for close

The new mechanism is aimed at helping maintain price stability. The bourse will enter the call auction stage in the last three minutes of trade from August 20.

The Shanghai Stock Exchange will apply a new mechanism to set daily closing prices to help maintain price stability.

Under the new system from August 20, the bourse will enter the call auction stage from 2:57pm to 3pm to determine final prices for the day, the exchange announced late on Monday in a statement on its official website.

All prices bid by investors during this period of time will be treated equally. The price of the stock will be determined in accordance with the principle of maximum volume.

Closing prices are currently set at the weighted average for the final one-minute of trade before the day’s last transaction. This has meant the closing price can be easily affected by large-scale order declarations at the end of the day, which may be abused to deliberately lift closing prices to lure more investors to chase the shares in the next trading session.

The call auction mechanism aims to help further stabilize stock prices in the closing stages of trade, according to the Shanghai bourse.

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