CHINA’S main stock exchange plans to limit trading suspensions to five months, China Securities Journal said yesterday, a move that could help clarify regulations for a practice that’s often caused headaches for investors.

    Loose regulation of trading suspensions in China came into sharp focus in July when half the firms on the Shanghai and Shenzhen stock exchanges suspended their shares to avoid tumbles during a market crash.

    Listed firms scrambled to halt trading as the country’s stock market crashed more than 30 percent since a June peak.

    Under current rules, firms can officially request trading halts for periods of between 10 working days and three months, although many find ways to extend the suspensions far longer, allowing them to skirt volatility in the market.

    Under the recommended regulations, firms would be allowed to suspend trading for up to three months and they could apply for only a single two-month extension, the newspaper said, citing a statement from the Shanghai Stock Exchange.

    Stock exchange insiders say firms often game the system to suspend trading in their shares. Suspensions normally need to be linked to major restructuring, planned share placements or the pending release of significant matters.

    China Securities Journal said currently around 13 percent of trading suspensions are longer than five months, while around 60 percent last less than three months. (SD-Agencies)