CHINA: Regulators to revise rules surrounding margin-trading and short selling

Friday June 5 2015

In order to standardise the business activities of margin traders, Chinese regulators have issued a draft of general provisions with the aim of changing margin-trading and short selling rules after brokerages recently tightened requirements. This is in the midst of volatility in share prices and a seven-year high in the Shanghai stock index.

The rules have yet to be translated into English, but reports indicate that restrictions under current rules to 6 month contract terms for margin trading will be eased, allowing for the extension of contract terms for a “‘reasonable” roll-over in order to ease volatility and allow investors to sell their holdings when the market is more in their favour. Additionally, restrictions from entering margin trading transactions will be relaxed – investors will no longer be required to have trading accounts with securities brokerages for more than six months before they can begin conducting margin trading, and investors will no longer be required to hold their investments in third-party escrow accounts.

Click on the above link for further details.