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China : China's Shanghai exchange restricts trading of high-risk bonds

June 17, 2014

The Shanghai Stock Exchange on Tuesday announced restrictions on who can trade high-risk bonds, another step in a campaign to steer retail investors away from risky high-yield investment strategies and toward buying and holding for value.

The new regulations, effective immediately, say bonds issued by companies that operated at a loss the previous year will receive a special "ST" designation, identical to the"special treatment" tag applied to shares in loss-making companies trading on the stock exchange.

Individual investors must have at least 5 million yuan (US$805,300) in financial assets to trade ST bonds, the statement said. They must also sign a document saying they understand the risk such trades entail. "Recently the number of bonds listed on the Shanghai Stock Exchange has hit repeated record highs, and credit risks of such bonds have increasingly attracted attention from both the market and regulators," an exchange representative said in a statement published on its website (

China allowed its first default of a publicly-traded bond this year when Chaori Solar defaulted on a bond traded on the Shenzhen exchange.

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Source: TendersInfo (India)

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