Research On The Liquidity Problem After The Stratification Of The New Three Boards

The National Equities Exchange and Quotations,also known as the new three board,is the third national stock exchange in China and is also an important part of China's multi-level capital market.The goal of the new three board is for innovative,entrepreneurial,high growth SMEs to provide financing services.In 2016,the new three board market have stepped into the rapid growth period with the number of listed companies from 5129 to 10,163 within one year.However,the liquidity problem in the new board has been increasingly serious.In 2016,for example,the average daily turnover of the GEM and SSE A shares were 89.4 billion and 204 billion respectively.The average daily turnover of the new three boards was only about 800 million,and the gap was very obvious.Serious liquidity issues held back the progress of many market functions.In order to solve this problem,regulators have also carried out a number of institutional reforms.In August 2014,the new three board launched the market maker system to provide bilateral quotes and deal making services for buyers and sellers.In June 2016,in order to carry on differentiation management for large groups of the three new board,the stratification system was set up to satisfy different demands of all market participants.However,due to the lack of strict supervision and supporting policies,the two systems only play a role in boosting the market in the short term,but can not solve the new three board liquidity problems fundamentally.This paper starts from the issue of the liquidity problem in the new three board and systematically introduces the four major system reforms of this market.This paper analyzes the internal causes of the liquidity problem of the new board from the perspectives of market orientation,investor singleness and system defects and so on,which can not improve the liquidity difficulties in the secondary market of the new three-board after the stratification.Combined with the development process of the NASDAQ market and the Chinese Taiwan OTC market,this paper study the NASDAQ market and the Taiwan OTC market how to solve their respective historical liquidity problem by institutional design and ideas adjustment through comparative analysis.In the end of this paper,appropriate countermeasures and suggestions would be presented from the market positioning,financing system,trading system,by absorbing the advanced experience of the overseas market.I hope these thoughts in this paper can help the new three board play an important role in China's multi-level capital markets.