Top Biz News

Trial margin trading plan issued by March

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-02-01 15:12

A trial program to launch margin trading and short selling business at selected security firms will have its preliminary evaluation by the Securities Association of China (SAC) completed by March.

China Securities Regulation Commission (CSRC), China's top securities regulator, will then complete a comprehensive evaluation of the brokers' applications based on the assessment results released by SAC, Shanghai Securities Journal reported, citing an unnamed CSRC official in charge of the issue.

A group consisting of 21 professionals has been officially set up by SAC to conduct the evaluation, the report said.

The official said the evaluation group will review the qualification of the securities firms that have applied for the trial program. Any violations, such as horizontal competition, absence of senior executives, major technical failures or illegal trading will affect the results of the assessment, he added.

He also pointed out that the launch of margin trading and short selling business will not cause a stock-market slide. Buying securities with cash borrowed from a broker when the stock market is at a low point will spur the price to rise and selling securities borrowed when prices are too high will effectively curb excessive speculations.

The official said the launch of margin trading and short selling business will help boost the efficiency of the capital markets. It will also help the investors to buy or sell securities based on a company's performances rather than relying on hearsay.