The China Securities Regulatory Commission will launch margin trading and short selling business for securities firms, it announced on Sunday. No introduction date was given, though a "test run” will be implemented, and “extended gradually".
Margin trading – which allows traders to borrow part of the money
necessary to buy a security or borrow security to sell – would “change
the current one-way trade on both Shanghai and Shenzhen stock markets
and serve as a risk aversion tool for investors,” state media reports.
It is a standard operation on most world stock markets.
Securities firms will “only be allowed to use their own capital and
securities for the experiment margin trading in China.” The initial
margin will be set at 50 percent of the purchase price when buying
eligible securities or 50 percent of the proceeds of a short sale.
The CSRC will choose the first batch of eligible securities firms “by
scrutinising their net capital, track of records in compliance audit,
current risk of control indexes and their plans for the upcoming test
run.”
The proposed introduction of margin trading and short selling on a
trial basis is seen as an effort by the government to diversify
financial instruments, state media writes.
News & Interviews 
(0 vote)
