Marginal progress
December 18, 2008 | BY
clpstaff &clp articlesWorldwide, regulators are restricting margin trading and short selling. But China is about to allow securities companies to engage in these types of business for the first time. The new scheme will be tightly controlled and small in scale. By Phil Taylor.
China is going it alone. Even while countries including the UK, Australia, Germany and Japan have permanently or temporarily banned short selling, the PRC's securities regulator has published new provisions which will allow securities companies to engage in margin financing and stock lending.
The latest rules (Tentative Provisions for the Examination and Approval of the Scope of Business of Securities Companies (证券公司业务范围审批暂行规定)) are the latest in a line of regulatory changes dating back to 2006. At that time, China issued the Trial Measures for the Business of Margin Lending and Short Sale of Securities and laid down the basic legal framework to govern those activities.
According to one Beijing-based lawyer, the China Securities Regulatory Commission (CSRC) drafted implementation rules for the Measures only to be denied by the State Council. Consequently, no implementation rules were ever made public. Instead, the State Council took a different approach, passing the Regulations for the Oversight of Securities Companies in April 2008.
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