China opens up short selling for select brokerages
28 February 2013 Shanghai
Image: Shutterstock
China is expanding its short selling programme to allow brokerages to borrow shares from institutional investors, according to reports.
The country is reportedly allowing 11 brokerages to borrow shares from a pool of 90 publicly traded companies to increase the efficiency of its equities market, manage risks and boost revenue.
State-run China Íø±¬³Ô¹Ï Finance Corp will oversee the programme. It will lend shares to the brokerages, which reportedly include Citic Íø±¬³Ô¹Ï, Haitong Íø±¬³Ô¹Ï and China Merchants Íø±¬³Ô¹Ï, so that they can re-lend them to their clients.
The pool will be made up of the shares of 50 and 40 companies that are listed on exchanges in Shanghai and Shenzhen. The shares reportedly have a total market capitalisation of 9.3 trillion yuan and can be borrowed for fixed periods of three, seven, 14, 28 and 182 days at different rates.
The Shanghai and Shenzhen stock exchanges expanded their joint pilot securities margin-trading programme on a trial basis in August 2012, permitting brokerages to borrow new money and stocks to re-lend to their clients.
China’s first ever securities margin trading programme, which was launched by the exchanges in 2010, permitted brokerages and investors to use their own stocks as collateral to borrow money to conduct margin trading.
This was extended to money and stocks from banks, funds and insurers for margin trading purposes.
The country is reportedly allowing 11 brokerages to borrow shares from a pool of 90 publicly traded companies to increase the efficiency of its equities market, manage risks and boost revenue.
State-run China Íø±¬³Ô¹Ï Finance Corp will oversee the programme. It will lend shares to the brokerages, which reportedly include Citic Íø±¬³Ô¹Ï, Haitong Íø±¬³Ô¹Ï and China Merchants Íø±¬³Ô¹Ï, so that they can re-lend them to their clients.
The pool will be made up of the shares of 50 and 40 companies that are listed on exchanges in Shanghai and Shenzhen. The shares reportedly have a total market capitalisation of 9.3 trillion yuan and can be borrowed for fixed periods of three, seven, 14, 28 and 182 days at different rates.
The Shanghai and Shenzhen stock exchanges expanded their joint pilot securities margin-trading programme on a trial basis in August 2012, permitting brokerages to borrow new money and stocks to re-lend to their clients.
China’s first ever securities margin trading programme, which was launched by the exchanges in 2010, permitted brokerages and investors to use their own stocks as collateral to borrow money to conduct margin trading.
This was extended to money and stocks from banks, funds and insurers for margin trading purposes.
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