As the stock market continued to nosedive, China's securities regulator unveiled new rules Thursday to limit big shareholders from selling their stocks.
The China Securities Regulatory Commission (CSRC) has asked big shareholders and the management, those who hold more than 5 percent of a company's shares, not to offload more than 1 percent of the company's shares within any three-month period, a regulation notice said.
Those who want to reduce their holdings have to publicize their plans 15 trading days beforehand, it said.
The new rules will take effect on Jan. 9.
Big shareholders were locked into their holdings for six months, since July 8 when the CSRC banned them from selling stocks to stem a summer market rout. The ban is due to expire at the end of the week.
The introduction of the new measure does not mean an exit of the "national team" including China Securities Finance Co. Ltd., whose function to stabilize the market will not change.
The new rules aim to prevent possible share-selling waves and help to stabilize the market.
The move came after trading on the Shanghai and Shenzhen bourses was halted Thursday morning after shares tumbled 7 percent within the first 30 minutes of trading, triggering the circuit breaker mechanism for the second time this week, after a similar case on Monday, the first day the mechanism took into effect.
Thursday's trading was the shortest duration in China's capital market history.
China's circuit breaker mechanism follows the Hushen 300 Index, which reflects the performance of bluechips listed in Shanghai and Shenzhen. When the index rises or falls by 5 percent, the circuit breaker imposes a 15-minute suspension in trading. If the Hushen 300 rises and declines by over 7 percent, trading is halted for the day.
