Regulator 'cautious' on T+0 settlement

The China Securities Regulatory Commission will be prudent in introducing same-day settlement (also known as T+0 settlement), to the A-share market, to protect small investors' interests, an agency spokesman said on Friday.

T+0 settlement means that securities can be traded the same day.

With the approval of the CSRC, the Shanghai Stock Exchange has already amended some of its regulations.

The new rules, released last week, state that same-day settlement is permitted for bond exchange-traded funds and gold ETFs.

Now, investors are waiting to see what happens on the A-share market.

"There is no legal barrier to permitting T+0 settlement on the A-share market, but we need to study it carefully," said the spokesman.

He said that same-day settlement will support the equity market by facilitating trading, enhancing pricing efficiency and expanding the trading patterns of investors.

"But share turnover has been very high in China, so the new method may not improve liquidity," said the spokesman.

"We're concerned that introducing it to the A-share market will increase volatility. The interests of small and medium-sized investors should be protected."

The spokesman also said that the CSRC is undertaking preparatory work on the introduction of preferred shares, and it will seek public comment when the time is ripe.

The CSI300, which covers the leading Shanghai and Shenzhen A-share listings, ended Friday down 1.3 percent at 2,368.6 points, its lowest close since Sept 6. It fell 2.4 percent for the week.

The Shanghai Composite Index slid 1.5 percent on Friday and 2.8 percent this week. That was its biggest weekly loss since late June, when there was a cash crunch.

The People's Bank of China didn't schedule any money-market operations on Thursday, for a third consecutive session.

The PBOC has drained more than 157 billion yuan ($25.81 billion) since the week ended Oct 4.