The scheme to link the Shanghai and Hong Kong stock markets could prompt changes to trading rules on the mainland that will be more to the liking of free-market advocates. The gyrations of the A-share market in Shanghai has been a primary concern for mainland regulators who gave priority to risk control in checking the wild swings of stock prices rather than letting market forces dictate movements over the past two decades. The mainland had a T+1 system that prohibited investors from buying and selling the same shares in a single day to curb volatility. Investors would have to hold on to shares for at least one day before they could dump them on the Shanghai or Shenzhen stock exchanges. "Those rules are not in compliance with free-market practices," said Dazhong Insurance fund manager Wu Kan. "It is believed that the changes will take place sooner rather than later." China Securities Regulatory Commission spokesman Zhang Xiaojun said last weekend the regulator was carefully studying the T+0 trading system under which investors could buy and sell the same shares in a single session. Gui Minjie, the chairman of the Shanghai exchange, said last month that a T+0 system was "technically ready". As investors in Hong Kong and Shanghai will be allowed to cross trade designated stocks on each other's market in six months, the CSRC will have to put rule changes on its agenda to ensure a smooth transition of the "through train" programme. CSRC chairman Xiao Gang said last week the regulator would not scrap the daily trading limits anytime soon, but he insisted that it would deepen the reforms to make the Shanghai exchange a bourse fully driven by market forces. It will be necessary to implement changes in trading rules to ensure that the Shanghai Stock Exchange is on the same footing as its international counterparts. Stocks on the mainland are still subject to a 10 per cent daily trading cap as regulators are wary about sharp intraday price fluctuations that could easily cause losses for thousands of retail investors. These investors are vulnerable to market rumours about policy changes or asset changes in individual companies. Scores of retail investors would often turn a blind eye to a company's fundamentals and would instead chase its moves on the market, largely unsuccessfully, in the hope of striking it rich overnight. The daily trading limit was put in place by regulators in 1996 to warn investors of the huge risks in momentum trading in the market. In the Hong Kong stock exchange, there are no trading limits in buying or selling a stock on the same day. The CSRC has been striving to relinquish its role in directing market movements since the early 2000s, hoping to give investors more freedom in raising funds or trading shares but the effort has not paid off yet. A Shanghai exchange official said that any major rule change on the mainland stock market would hinge on the risk appetite of regulators as the bourse is lobbying the CSRC for a T+0 trading system and the scrapping of trading limits. "Investors have been much more mature than before," said retail investor Zhang Jing, but it may be time to "embrace changes" in the way the market is run.