On the first day of the new trading rules implementation, the ST sector showed divergence. Industry insiders: It helps improve pricing efficiency and price fairness.

Shanghai Securities News reporter Liu Yuxi and Fei Tianyuan

On July 6, the new trading rules of the Shanghai, Shenzhen, and Beijing stock exchanges officially took effect. Among the most closely watched changes by the market is that the price limit for risk-warning stocks on the main boards of Shanghai and Shenzhen (ST, *ST) has been widened from 5% to 10%, achieving consistency with other main board stocks.

On the first day the new rules were implemented, the ST board (including ST and *ST stocks, the same below) showed divergence. By the close of that day, the ST sector index compiled by East Money fell 1.31%, while individual stocks such as ST Xingnong, ST Haiwang, and ST Ruimao each reached the 10% daily limit up. A reporter from Shanghai Securities News noted that before the new rules landed, the ST sector had already gone through a round of a “drop first then rebound” pattern: the sector index had been in continuous pullback since late April, hit a new low in nearly one year on June 29, and then entered a rebound phase. Over the most recent five trading days, the cumulative gain exceeded 5%.

Looking back at history, the risk-warning regime in the A-share market has undergone nearly three decades of evolution. In 1998, the Shanghai and Shenzhen stock exchanges formally introduced the ST system, marking stocks of listed companies with financial conditions or operating abnormalities with the “ST” label. Starting from February 2001, regulators, to prevent market risk, capped the price fluctuation limit of main board ST stocks at within 5%. In January 2013, the Shanghai Stock Exchange further set up a “Risk Warning Board,” separating ST, *ST, and delisting reorganization-period stocks from the main board, and implementing independent trading, in coordination with investor suitability management and stricter trading restrictions.

Since then, the Risk Warning Board has become an important supporting mechanism for the A-share market’s delisting system. Stocks move dynamically into and out of the board, and the number of stocks has also been continuously changing. According to Choice data, as of July 6, there were 211 A-share stocks in a risk-warning status, an increase compared with the same period last year. Among them, a total of 150 risk-warning stocks on the Shanghai and Shenzhen main boards are directly affected by this new rule—69 in Shanghai and 81 in Shenzhen. In terms of industry distribution, the three industries with the leading number of risk-warning stocks are mechanical equipment, computer, and pharmaceutical & biological.

With respect to this adjustment to the price limit, market participants believe that the previous 5% narrow limit, although originally intended to protect investors, produced some “side effects” in actual operation. Because the room for price movement was too narrow, after major news was released, stock prices often needed several consecutive days of “limit up” or “limit down” to fully digest the information, which not only distorted price signals but also hindered the normal release of liquidity. At the same time, the “rule fragmentation” created by different boards applying different price limit rules objectively provides arbitrage opportunities for some funds. After widening the limit to 10%, stock prices can digest both buy-side and sell-side information within a more ample pricing space, which is conducive to reflecting market expectations and helps improve pricing efficiency and price fairness.

The strategy team at Galaxy Securities believes this is a supporting-system reform accompanying the continued deepening of the comprehensive registration-based system. The essence of unifying the price limit rules is to use market-oriented means to strengthen the survival-of-the-fittest function, so that companies with genuine fundamental support can obtain reasonable pricing, while companies lacking intrinsic value can accelerate their exit.

From the standpoint of improvements in listed-company quality, this year has seen an acceleration in the “de-risking” (removal of risk warnings) pace of A-share ST stocks. According to Choice data, as of July 6, 2026, 62 ST stocks had successfully removed their risk warnings within the year, surpassing the level for all of 2025. Most companies achieved compliance with financial indicators through restoring their core business, asset restructuring, or introducing strategic investors. The significant increase in the number of removed risk warnings also, to some extent, reflects an enhanced ability of the A-share market to eliminate the weak and improve self-purification.

In addition to the adjustment to the price limit for risk-warning stocks on the main boards, the new trading rules of the Shanghai, Shenzhen, and Beijing stock exchanges also include several other important changes: First, the after-hours fixed-price trading mechanism has been substantially expanded. The existing mechanism previously covered only after-hours pricing trading on the STAR Market and the ChiNext, but this time it has been expanded to all A-share and ETF products. Second, the Shanghai Stock Exchange’s fund closing trading mechanism has been adjusted: the end-of-session trading for funds in the Shanghai market has changed from continuous competitive bidding to a closing call auction. The daily closing price is generated through the closing call auction, and the closing call auction time is from 14:57 to 15:00. Third, the confirmation time for agreement-based block trades on the ChiNext has been adjusted to 9:30 to 11:30 and 13:00 to 15:30. Fourth, a market maker system has been introduced for the ChiNext board.