China 'ready' to expand stock margin trading programme
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China 'ready' to expand stock margin trading programme 29 August 2012Shanghai Reporter: Jenna Jones
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The Shanghai and Shenzhen stock exchanges are set to expand their pilot securities margin trading programme on a trial basis, permitting brokerages to borrow money and stocks to re-lend to their clients, according to reports.
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.
Brokerages are now reportedly permitted to borrow money and stocks from banks, funds and insurers, and re-lend the money and stocks to their clients to conduct margin trading.
Chinese state media reportedly said that 11 brokerages from the existing programme have been selected to conduct the re-lending business.
Brokerages will begin with borrowing money for the re-lending business and expand it to borrowing stocks when they become more experienced in the activity, according to reports.
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