(Yicai Global) June 14 -- The Shanghai Stock Exchange's new Nasdaq-style technology board will be empowered to rein in extreme market volatility by temporarily halting trading in listed companies if their share prices hit a certain limit over the first five sessions.

The board will also impose order limits in the initial period of competitive bidding, the Shanghai Securities News reported, citing the China Securities Regulatory Commission. The bourse will publish specific trading rules soon, the report added.

The SSE Star Market, previously known as the Science and Technology Innovation Board, will start trading within two months, SSE Chairman Huang Hongyuan said yesterday at the 11th Lujiazui Forum in Shanghai. He revealed that six firms have been approved for listing following the last two review meetings, and there will be six more meetings before the board starts operations.

Demand may greatly outstrip supply when the SSE Star Market debuts, according to a CSRC department head who asked to remain anonymous. Over 2.5 million people have received permission to trade on the SSE Star Market thus far with more than CNY100 billion (USD14.5 billion) in funds if each invests CNY50,000 (USD7,230), he said.

The first 28 firms that went public on the Shenzhen Stock Exchange's Nasdaq-style ChiNext Board doubled in value on Oct. 30, 2009, the first trading day, data show. Their shares then fell an average 8.65 percent and 5.84 percent in the second and third sessions, and gained 2.75 percent and 2.82 percent in the fourth and fifth.

People should treat the new board calmly and rationally, CSRC Chairman Yi Huiman urged yesterday at the Lujiazui Forum. An initial imbalance in supply and demand and the need to adjust to the new trading mechanisms may spur short-term speculation and enable huge gains or losses, he said.

Editor: Ben Armour