Pilot Margin Trading and Securities Lending Officially Kick Off in China
The SZSE and SSE have officially given the notice to six pilot securities traders, providing that the application for margin trading and securities lending trading will be accepted as of March 31, 2010. The move signals that the margin trading and securities lending carefully prepared with 4 years will officially enter into the market operating phase.
Since 2006, the two stock exchanges have made the tremendous preparation in accordance with the relevant requirements of the CSRC. In 2010, the two exchanges have put more efforts to push forward the relevant work, prudently determining the target securities and collaterals scope for initial stage of pilot margin trading and securities lending business, promulgating the “Business Guideline for Margin Trading and Securities Lending Pilot Members”.
The relevant persons of the two exchanges reminded that the margin trading and securities lending still is a innovative business in the China’s securities market, in view of the leverage role and short mechanism of the business, it is relatively complicate and risky, so, the participants in the business must possess more professional knowledge, strong economic strength and risk-taking capacity. Before make the margin trading and securities lending trading, an investor shall fully know the relevant business rules, pay much attention to key information, such as collateral securities, conversion rate, and get hold of relevant risk prevention measures.
The persons also expressed that during the pilot period the two exchanges will pay close attention to the margin trading and securities lending trading in the market, and positively fight against market risks. When the substantially abnormal takes place in the market trading, the stock exchanges will take some measures such as suspending the trading in a target stock or all target securities in order to safeguard the steady operation of the market.
At last, the persons stressed that the pilot margin trading and securities lending is an important measure in China’s capital market to push forward the fundamental system construction, having the significance in improving securities trading mechanism, forming the reasonable and regulated financing channel for capital and securities. In the initial pilot period, a securities company is required to stringently carry out the investor appropriateness management system, cautiously select the business offices to open business and investors intending to engage in the margin trading. All securities companies are required to seriously conduct the check-up on key links such as account management, entrusted declaration, trading monitoring, intensify the internal risk control and assure the regulated operation of pilot business.