Small and Medium Enterprises Board (SME Board) was introduced by Shenzhen Stock Exchange in 2004 to provide a direct financing platform for the small and medium enterprises with a prominent core business and hi-tech contents. The regulatory rules governing the SME Board, ranging from the laws and regulations to the ministerial rules of the CSRC and other relevant departments of the State Council, will remain unchanged from those governing the main board. The listing standards for the SME Board will be the same with those for the main board. Requirements applicable to the main board companies regarding information disclosure, IPO and listing coaching, financial indicators, profitability, size of shares capital and the ratio of pubic shares must also be fulfilled by SME Board companies.

As to system design, it is different from the Main Board in that it operates under independent trading and regulatory systems, independent stock coding and stock price indices. Innovative measures tailored to the nature of the SME Board will be taken so that when conditions mature, the SME Board as a whole will split from the main board to form the New Market.

Compared with the Main Board, the difference in the trading rules governing the SME Board lies in the following:

(1) The SME Board implements open auction in the pre-opening session compared with closed auction for the main board.
(2) Closing prices of the SME Board are determined through auction, while those in the main board are the weighted average within a set period;
(3) Improvement will be made regarding disclosure system and trading suspension of abnormal stocks;
(4) The SME Board index will be launch as a benchmark.

In case where no relevant provisions are lacking in the Special Provisions on Trading in the SME Board, rules presently in force shall prevail.

Considering the risks particular to small and medium enterprises, the SME Board will take tailor-made measure different from those of the Main Board to maintain an orderly market. Firstly, based on the particular risks of SME Board, innovations are made in determination of pre-opening prices and closing prices. Improving measures are also to be taken in disclosure of trading information such as introduction of monitoring parameters about deviation ratio of price changes, turnover, etc. Meanwhile, initiatives will be taken in improving the existing trading and surveillance systems. Secondly, regulation will be strengthened in that regular examination will be conducted to see if it departs from determined investment strategy. Annual report statement meeting will be held each year to clarify matters like shareholding structure and good faith management of the companies themselves and their intermediaries.