China Securities Regulatory Commission, Guiding Opinion on Pilot Engagement in Margin Trading and Short Sale of Securities by Securities Companies

中国证券监督管理委员会关于开展证券公司融资融券业务试点工作的指导意见

March 11, 2010 | BY

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China gives green light to margin trading.

Clp Reference: 3700/10.01.22 Promulgated: 2010-01-22

Issued: January 22 2010

Main contents: The first batch of securities companies that apply for pilot engagement in margin trading and short sale of securities shall satisfy the provisions of Measures for the Administration of the Pilot Projects for Margin Trading and Short Sale of Securities by Securities Companies and each of them shall also meet the following criteria:

(1) its net capital for each of the most recent six months shall be at least Rmb5 billion;

(2) the most recent classification rating it received was “Grade A”; and

(3) it has self-owned capital and securities necessary for launching margin trading and short sale of securities, and the ratio of its self-owned capital to the net capital is relatively high (Article 2).

Securities companies that launch margin trading and short sale of securities shall also calculate capital reserves for operational risks at no less than 50% of the scale of the business launched. The self-owned securities bracketed for short sale of securities must be securities under the category of “financial assets available for sale” (Article 8).

Related legislation: Regulations for the Oversight of Securities Companies, Apr 23 2008, CLP 2008 No.6 p.45; and Measures for the Administration of the Pilot Projects for Margin Trading and Short Sale of Securities by Securities Companies, Jun 30 2006

clp reference:3700/10.01.22promulgated:2010-01-22

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