China orders block trade for sale of big tranches

China's securities regulator late on Sunday ordered shareholders of a listed company to sell stocks on the block trading system on expectations that they will sell a large amount of shares after the lock-up period.

The China Securities Regulatory Commission (CSRC) obliged shareholders to use the block trading system provided that more than 1% of a listed company's total shares are sold within a month.

The move is aimed to stabilize the stock market, said analysts. If all such shares are traded on the bid trading system, the trading will be less efficient as the volume is often restricted by the buying interest on the secondary market, said a spokesman of the CSRC.

In addition, the trading will bring great pressure on the share prices and twist the pricing mechanism, said the spokesman.

The move will help ease the pressure on the secondary market and the impact on the pricing mechanism on the bid trading system, and to stabilize investors' expectations on the reduction of the holding of such shares, said the spokesman.