Research With The Trading System Of Discrete Components On The New Sanban Market In China And Market Quality

The National Equities Exchange and Quotations (NEEQ) was in operation officially on January 16,2013, which marks the new SanBan market entered the standardization operation of the national over-the-counter formally in China. But the Zhongguancun being a pilot, whose new SanBan market transactions have been extremely light since 6 years ago; what’s more, a number of the trading companies have no businesses. On February 8,2013, the business rules has carried on the related changes of the original system, which reduces the minimum trading unit to 1000 shares and the smallest unit of quotation to per share 0.01 Yuan.This paper gives a deep research on the trading system of discrete components and analyses the minimum trading unit before and after the adjustment that produces an effect on the quality of market liquidity, volatility and effectiveness, using event and empirical study, then being with them to reduce the minimum trading unit policy rationality of evaluation. Treating improving the quality of the market as the goal, and further combining with the present situation of China’s new SanBan markets establish relevant theoretical bases and put forward policy suggestions for reasonable settings of the minimum trading unit and tick size.The empirical results show that the decrease of the minimum trading unit will improve trade activity, making the volume of day and month rate slightly increased, and increase markets’ liquidities and cut down the stock price volatility, improving the value of stocks, but no significant effects on the improvement of the market efficiency. Meanwhile, for the abatement of the minimum trading unit, the trading active of large stock and the light trading small one respond differences. As the minimum trading unit of trading down and the liquidity of light trading stock fell, on the contrary, price fluctuations increasing, those that leads the value of the shares to drop. Being a discrete component of another part of the deal, the setting of tick size should match with the type of the traders in the market, the tick size’s reduction is good for small investors but except investors those who are from organization.Lessening the minimum trading unit does not improve the market quality significantly under the background of lack of stock trading activity in our country’s New SanBan market, at the same time, due to the market investors still being with higher barriers to entry, it gives priority to institutional investors, therefore, the tick size can be appropriately raise in order to improve the depth of the market quotation.