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All member units:
In order to prevent the risk of warrant trading and maintain the normal order of the market, we hereby notify you of the matters related to further strengthening the risk management of warrant brokerage business as follows.
1、 Sign the Warrant Risk Disclosure Statement with investors participating in warrant trading in strict accordance with the relevant notice requirements of the Exchange
》To introduce the relevant business rules to investors trading warrants in a comprehensive manner, fully reveal the high risk of warrant trading, and earnestly guide and remind investors to pay attention to and control the risk of warrant trading.
2、 We will further strengthen the management of securities accounts and prevent violations of borrowing accounts to trade warrants.
3、 Carry out a comprehensive inspection on the front end of the transaction of the business department, and put an end to the intraday financing, the use of virtual capital accounts and other illegal financing transactions of warrants.
4、 Strengthen the risk management of T+0 trading of warrants, and establish and improve the rules and regulations for risk management of warrant brokerage business.
5、 Strengthen the daily supervision over the warrant brokerage business of the business department under its jurisdiction, and timely perform the relevant reporting obligations as required by the Exchange.
It should be noted that G Baosteel's share reform warrant will expire on August 30, 2006. Each member unit should strengthen investor education, protect investors' rights and interests, and remind investors to pay attention to the risks of Baosteel's warrants: (1) As the expiration date approaches, if the final exercise value of Baosteel's warrants is less than the market price of warrants, warrant holders may face greater investment risks, The Baosteel warrant may not have any value when it expires; (2) According to the Interim Measures of Shanghai Stock Exchange for the Administration of Warrant Business, the trading of warrants shall be terminated five trading days before the expiration of their duration, and the last trading day of Baosteel warrants shall be August 23, 2006; (3) The exercise date of Baosteel warrants is only one day, which is the last day of the warrant duration, namely August 30, 2006. Baosteel warrants that have not been exercised on the expiration date will automatically become invalid after the exercise date. Each member unit shall remind investors to pay attention to risks in respect of the above matters by posting promotional materials, telephone trading tips, online trading tips or other flexible and effective ways in the business place.
Each member unit shall further strengthen the risk management of the warrant brokerage business in accordance with the requirements of this Circular, and fully disclose the risks of warrant trading and exercise to investors. The Exchange will conduct spot checks on the implementation of member units as appropriate.
It is hereby notified.
Shanghai Stock Exchange
June 1, 2006
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