Launch of Margin Trading, Short Selling

Updated: 2010-03-31 15:05
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Launch of Margin Trading, Short Selling

Editor's Note: China launched its margin trading and short selling trial program on March 31 on the Shanghai and Shenzhen stock exchanges after four years of preparation.

The margin trading and short selling trial business, together with stock index futures, are innovations by Chinese regulators to diversify the country's capital market.

The day before the official launch of the trial program, CITIC Securities signed an agreement with Jiangsu Winfast Investment and Development Co Ltd, a securities asset management company, offering the latter credit limits of 28 million yuan ($4.1 million) for margin trading and 10 million yuan for short selling, the largest on this market so far. [Full Story]





Launch of Margin Trading, Short Selling
People pose in front of the building of the China Securities Regulatory Commission. [Asianewsphoto]

China approves index futures, margin trading

China's securities regulator said Friday the State Council had approved "in principle" the launch of index futures and given the green light to pilot the margin trading business, in an attempt to boost the stable and healthy development of the capital market.

The regulator would select the first batch of securities companies for the margin trading business soon, based on their net capital, risk control and regulatory management, said an official with the China Securities Regulatory Commission (CSRC). [Full Story]

CSRC sets out rules on margin trading

China's top securities regulator on Friday unveiled regulations on the pilot programs for the soon to be launched margin trading and short selling business.

Securities firms must have at least 5 billion yuan in net assets and be rated as A-class in order to be qualified for the business.

The regulator also required securities firms to have sufficient capital holdings and stocks of their own and have completed test runs of the trading network in order to conduct the business. [Full Story]





Launch of Margin Trading, Short Selling
An outlet of CITIC Securities in Shanghai.

Securities firms pass margin trading review

All eleven securities brokerages have passed an expert panel's evaluation for margin trading and short selling, and will be able to apply for a pilot program for the business as soon as next week.

The preliminary evaluation organized by the Securities Association of China (SAC) involved 21 experts, who reviewed the margin trading and short selling schemes of 11 securities brokerages competing for licenses to launch the business, including GF Securities, Citic Securities, Guotai Juan Secutiries, and Shenyin & Wanguo Securities. [Full Story]

Brokerages apply for margin-trading pilot run

The China Securities Regulatory Commission (CSRC) today begins to accept applications for a margin-trading and short-selling pilot program, the China Securities Journal reported.

Sources at securities brokerages told the paper local offices of the CSRC completed an on-site inspection Wednesday at all 11 brokerages competing for the license to run the business and that the commission could finalize the qualification list next week. [Full Story]

Six brokerages get nod for margin trading

China's securities regulator announced Friday it approved six securities companies to pilot margin trading business.

The approvals came more than two months after the State Council, the cabinet, gave the green light to pilot the business on a trial basis.

The six securities companies are Guotai Junan Securities, Guosen Securities, CITIC Securities, Everbright Securities, Haitong Securities and GF Securities, said an official with the China Securities Regulatory Commission (CSRC), who asked not to be named. [Full Story]





Launch of Margin Trading, Short Selling

Margin trading may bring in 90b yuan on A-share market

The upcoming margin trading pilot program, which allows securities companies to lend stocks and money to investors, is likely to bring about a total of 90 billion yuan ($13.18 billion) to the A-share market in its initial stage, Securities Times reported on March 22, citing research by Sinolink Securities.

Fan Xiangpeng, analyst with Sinolink Securities, told the newspaper that securities companies would use funds worth 30 percent to half of their net asset value in the margin trading business, and accordingly he estimated that the first batch of six brokerages' total funding in the business would likely reach 40 billion to 60 billion yuan.

As the second batch of brokerages would soon get the green light from regulators to participate in the pilot program, the A-share market would get a total of 60 billion to 90 billion yuan from the margin trading business, Fan predicted. [Full Story]

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Launch of Margin Trading, Short Selling

 An investor at a securities firm in Shanghai. The program will boost business for brokerages and provide investors with hedging tools.[China Daily]

Index futures

The trading in the benchmark Shanghai-Shenzhen 300 stock index futures contracts will make its much-awaited debut on April 16, the China Financial Futures Exchange said on March 26.

The first contracts to trade will be for May, June, September and December. Investors must pay cash deposits equivalent to 15 percent of the contract value for May and June contracts while the minimum trading margin for longer-term contracts is 18 percent, the exchange said in a statement posted on its website.

The maximum price fluctuation was set at 10 percent above or below the benchmark listing price on the first trading day for May and June contracts and 20 percent for September and December contracts. [Full Story]


Twenty-eight small and medium-sized enterprises started trading their shares at China's NASDAQ-style market, ChiNext, in Shenzhen, Guangdong province on October 30, 2009.

ChiNext was expected to provide more fund-raising channels for small and medium-sized businesses of high technology and high growth.

The central bank and the whole financial system will consistently support ChiNext, said Zhou Xiaochuan, governor of the People's Bank of China, the central bank, at the trade opening ceremony. [Full Story]