ISLA: There's a bull in the China store, but no bear
22 June 2016 Vienna
Image: Shutterstock
China is giving off mixed messages to the securities lending market on its willingness to incorporate short selling, according to ISLA's conference panellists.
Buy-side representatives at ISLA's 25th Annual Securities Finance and Collateral Management Conference explained that regulators are actively looking to facilitate the ability of both onshore and offshore market participants to peruse a short strategy but are being held back by rigid market systems.
Although an onshore facility is already in place to allow for short selling to take place, it is only available to specific domestic investors, explained one panellist.
Conference delegates in Vienna were told not to expect to be able to engage in short selling or securities lending in China as a foreign investor for at least two years.
At the same time however, panellists raised concerns that, while giving positive indicators to market participants on the one hand, China is still guilty of using short selling as a scapegoat to blame for market headwinds, fuelling negative perceptions of the short selling strategies.
However, perpetually optimistic panellists pointed to other Asian markets such as Taiwan as examples of where perceptions of short selling changed from benefiting from someone else's loss to a legitimate hedging strategy, and voiced hope that the same could occur in China.
Buy-side representatives at ISLA's 25th Annual Securities Finance and Collateral Management Conference explained that regulators are actively looking to facilitate the ability of both onshore and offshore market participants to peruse a short strategy but are being held back by rigid market systems.
Although an onshore facility is already in place to allow for short selling to take place, it is only available to specific domestic investors, explained one panellist.
Conference delegates in Vienna were told not to expect to be able to engage in short selling or securities lending in China as a foreign investor for at least two years.
At the same time however, panellists raised concerns that, while giving positive indicators to market participants on the one hand, China is still guilty of using short selling as a scapegoat to blame for market headwinds, fuelling negative perceptions of the short selling strategies.
However, perpetually optimistic panellists pointed to other Asian markets such as Taiwan as examples of where perceptions of short selling changed from benefiting from someone else's loss to a legitimate hedging strategy, and voiced hope that the same could occur in China.
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities Finance Times
