Puzzle: Why can't delisted companies enjoy continuous bidding?

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Puzzle

Researcher at Zhejiang University Public Policy Research Institute

Professor of Finance at Zhejiang University of Finance and Economics, PhD Supervisor

If delisted companies in the 3rd series and 1st series on the delisting board can apply a single trading method due to poor quality, then high-quality delisted companies in the 5th series should enjoy the continuous auction trading rules of Beijing Stock Exchange and STAR Market listed companies. After all, the qualification recognition for investors on the delisting board, STAR Market, and BSE is based on assets of 500k yuan plus two years of investment experience.

The current trading mechanism of the delisting board makes it difficult to discover high-quality targets hidden within. According to existing rules, the transfer day order declaration time for delisted stocks is from 9:30 to 11:30 and 13:00 to 15:00; the price discovery rules are: at 10:30, 11:30, and 14:00 on the transfer day, potential transaction prices are revealed; after 14:00, prices are revealed every ten minutes; after 14:50, every minute. Final transactions are concentrated at 15:00, but different buy and sell prices and corresponding stock quantities are not disclosed in real time. This single centralized auction mode is essentially a passive waiting type of trading, with lagging market information and low trading efficiency, and it lacks the龙虎榜 data of the main board, only providing abnormal price movement announcements, making it difficult for the true value of high-quality delisted companies to be reflected promptly through stock prices. If delisted companies in the 3rd and 1st series can use this trading method due to poor quality, then high-quality delisted companies in the 5th series should enjoy the continuous auction trading rules of BSE and STAR Market listed companies. After all, the qualification recognition for investors on the delisting board, STAR Market, and BSE is based on assets of 500k yuan plus two years of investment experience.

BSE adopts a mature hybrid bidding mechanism, with opening call auction from 9:15 to 9:25, continuous trading from 9:30 to 11:30 and 13:00 to 14:57, and closing call auction from 14:57 to 15:00. Real-time transactions are achieved through order-by-order continuous matching, with ±30% price fluctuation limits to ensure trading activity and curb extreme price volatility. Under this trading mode, investors can adjust their bid prices in real time according to market dynamics, making price discovery more efficient and liquidity more sufficient. The National Equities Exchange and Quotations (NEEQ), BSE, New Third Board, and the old delisting Tier-3 market ( and the delisted companies sector ) are not independent operating entities but are an integrated whole directly managed by the China Securities Regulatory Commission, serving the multi-level capital market development—organized around the NEEQ as the core operator, with the BSE ( selected tier ) as the leading public market, the innovation and basic tiers of the NEEQ as nurturing hubs, and the old delisting Tier-3 as a safety net and rebirth channel for delisted companies, forming a “risk stratification, gradient cultivation, two-way flow” SME capital market service system.

By the end of 2025, the public consultation on the Securities Regulatory Commission’s document No. 469 [2025] “Rules for Transfer of Stocks of Two Networks and Delisted Companies” and “Information Disclosure Rules for Two Networks and Delisted Companies” indicates major changes in the operational and institutional environment of the delisted companies. The revision of document 469 by the NEEQ not only concerns the future development of delisted companies but also relates to improving the market’s survival of the fittest mechanism and protecting investors’ legitimate rights. I believe that, based on market demands, revisions to No. 469 should focus on “three equalities” and the construction of the 5th series high-quality companies, with 3rd and 1st series companies gradually aligning with the 5th series high-quality companies to achieve upward transfer, gradually filling the current gaps in the transfer and relisting system of delisted companies.

First, regarding “standard equality,” the correspondence between delisting standards and relisting standards should be clarified. For companies delisted due to market indicators ( such as stock price below 1 yuan ), it should be stipulated that once this indicator recovers and remains stable for a certain period ( such as 20 consecutive trading days with closing prices not below 1 yuan ), they automatically qualify to apply for relisting, without additional thresholds unrelated to delisting indicators such as financials or share capital. Regulators should focus on the company’s ongoing operational capacity and compliance, rather than purely profit scale.

Second, regarding “procedural equality,” the review cycles and procedures for delisting and relisting should be unified. The review period for relisting should be shortened to within 15 trading days, consistent with the delisting review cycle, reducing subjective judgment in review processes, clarifying standards and procedures, and increasing transparency. Additionally, a fast-track review process should be established for non-ST stocks delisted at a face value of 1 yuan. For high-quality delisted companies that meet conditions and are highly recognized by the market, implement “immediate reporting and review, immediate approval after review,” to improve efficiency and reduce time and capital costs. Furthermore, unnecessary administrative intervention should be minimized, adhering to market-oriented principles, allowing the market to judge the investment value of companies, avoiding distortions caused by administrative interference.

Third, regarding “opportunity equality,” efforts should be accelerated to build a “stepwise transfer channel,” promoting the implementation of the 5th series ( high-quality tier ). Clear entry conditions, trading mechanisms, and transfer rules for the 5th series high-quality companies should be established, with “annual report disclosure with no reservations and positive net assets” as core criteria. Use a trading mechanism consistent with BSE’s “call auction + continuous auction,” set ±30% price fluctuation limits, and conduct normal daily trading to enhance liquidity of high-quality delisted companies. Also, establish a transfer mechanism between the 5th series high-quality tier and BSE; for companies that have traded continuously for over a year in the 5th series high-quality tier and meet BSE listing conditions, a green channel or direct transfer should be available without reapplying through cumbersome review processes. For companies meeting main board listing conditions, a convenient transfer channel should also be established to enable two-way flow between different levels of capital markets.

Finally, regarding supporting mechanisms, the information disclosure and investor protection systems for delisted companies should be improved. Require delisted companies to strengthen information disclosure, promptly disclose operational status, financial data, and relisting progress, synchronized with main board companies, to protect investors’ right to know; establish investor compensation mechanisms for delisted companies, clarifying compensation responsibilities for losses caused by unreasonable delisting rules or irregular review processes, effectively safeguarding the legitimate rights of small and medium investors. Additionally, strengthen supervision of the old third board market, crack down on insider trading, stock price manipulation, and other violations, maintain market order, and create a healthy environment for the sustainable development of delisted companies.

I believe that the maturity of the capital market is never about “only淘汰” (elimination), but about an ecological cycle of “both in and out, winners and losers, two-way flow.” ( Note: This article is part of a series of studies on delisted companies. )

This article was first published by the author in Financial Investment News

Editor|Li Li

Reviewer|Yuan Gang