What Are the Convertible Bond Trading Rules? How to Convert Bonds into Stocks?

Convertible bonds can not only be purchased but also traded on the market. As a special bond trading system, their rules differ from stocks. Investors should pay attention to the following six aspects:

1. T+0 Trading System
   Convertible bonds are traded under a same-day circular trading system (T+0). Purchased bonds can be sold on the same day without waiting for the next trading day.

2. No Price Limit
   Unlike stocks, convertible bonds have no price fluctuation limits, meaning their prices may experience significant volatility within a single trading day.

3. Temporary Trading Halt Mechanism
   To curb short-term speculation, a temporary suspension mechanism is implemented.

   • Example (Shenzhen Market):

     • If the price rises or falls 20% from the previous closing price, trading halts for 30 minutes.

     • If the price reaches ±30%, trading pauses until 14:57. If the halt extends beyond 14:57, trading resumes at 14:57.

4. Minimum Purchase of 10 Bonds
   Transactions must be in multiples of 10 bonds (1 lot). Investors holding odd lots (e.g., 7 bonds) must sell them in a single order.

5. Order Execution Priority
   Orders follow "price-time priority":

   • Same price: Earlier orders execute first.

   • Same time: Better-priced orders execute first.

6. Trading Hours
   Same as A-shares:

   • Morning: 9:30-11:30 | Afternoon: 13:00-15:00

   • Call auction: 9:15-9:25

How to Convert Bonds into Stocks?

Sell → Enter Conversion Code → Confirm
Each convertible bond has a unique conversion code (e.g., "XX Convert").

Pre-Conversion Notes

1. Conversion Period: Typically 6 months after issuance until maturity.

2. No Fees: Conversion requires no additional funds.

3. Early Redemption Clause: If the issuer announces redemption, investors must convert or sell promptly to avoid losses (redemption price is usually at face value).

4. Face Value & Share Requirements:

   • Minimum conversion: CNY 1,000 face value.

   • Fractional shares are paid in cash within 5 days (e.g., 0.88 shares × conversion price of CNY 5 = CNY 4.4).

Operational Steps

1. On the trading platform, select "Order Entry."

2. Enter the conversion code (not the bond code).

3. Input the conversion amount (system auto-calculates based on CNY 100 face value).
   Note: Some broker interfaces may label this as "Buy," but it executes conversion.

Strategy Tip:

• Selling bonds directly is often more profitable than converting (avoids arbitrage-driven price drops).

• Large holders may accept minor losses to convert due to low bond liquidity.

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