BEIJING, June 14 -- The Shanghai Stock Exchange is considering plans to double the daily trading band for its largest blue chips and allowing investors trade them an unlimited number of times a day, the bourse's chief researcher said Tuesday.

China's bigger stock exchange may assign a 20 percent daily trading limit on its top 50 listed firms by market value, which are now restricted to rising or dropping by 10 percent during a session, Liu Ti, director of the bourse's product research center, said in a statement.

The local stock exchange is also studying plans to allow investors to buy and sell those blue chips on the same day as part of a bid to prop up trading, according to Liu.

"Based on our research, we found risks for investors and brokers would dwindle if the blue chips are allowed to be traded unlimited times a day," said Liu, "Increasing the trade band can also help boost market liquidity."

Market rally

China's securities regulators have been urging the mainland's financial companies and two exchanges to beef up development of derivative products to sustain a market rally after a four-year equity slump.

The benchmark stock indexes in Shanghai and Shenzhen have climbed more than 30 percent this year after dipping to eight-year lows in 2005.

Authorities have said they are planning to introduce stock index-based warrants and futures late this year. The Shanghai exchange is also now drafting rules on a margin-trading system and short selling, according to Liu.

Margin trading lets brokers lend money or securities to investors, who in turn use the stocks they purchase by borrowed funds or capital gained through selling borrowed equities as collateral.

(Source: Shanghai Daily)