Beijing Stock Exchange Solicits Comments on the Detailed Rules of Margin and Securities Lending
In the initial stage, only the basic business of two financing will be launched, and the refinancing will be launched following the operation is stable.
According to the Beijing Stock Exchange’s website on September 2, the Beijing Stock Exchange has formulated the “Beijing Stock Exchange Margin and Securities Lending Rules” (hereinfollowing referred to as the “Margin Securities Lending Rules”), which will be publicly solicited from the market from September 2, 2022. Opinion.
It is understood that the Beijing Stock Exchange established a basic trading system of continuous bidding when the market opened. The market operates smoothly, the group of qualified investors has grown rapidly, the liquidity level has been significantly improved, and it has the basis for business implementation. The launch of the margin financing and securities lending system will further improve the trading mechanism of the Beijing Stock Exchange and enhance the pricing function of the secondary market of the Beijing Stock Exchange.
“The launch of the margin financing and securities lending system by the Beijing Stock Exchange has sent a signal of continuous reform to the market, which is conducive to stabilizing market confidence.” Zhou Yunnan, founder of Beijing Nanshan Investment, told the “Securities Daily” reporter that margin trading and securities lending can effectively improve the second level of the Beijing Stock Exchange. It can improve the liquidity of the primary market and improve the market activity; it will help to improve the price discovery function of the secondary market and promote the stability of the secondary market.
“The margin financing and securities lending system can provide some incremental funds for the market, and can also provide certain means of hedging. However, margin financing and securities lending are leveraged transactions, and investors need to pay attention to the risks.” Liu Jing, chief analyst of Shenwan Hongyuan Specialist, told Securities Journalist.
The margin financing and securities lending business of the Beijing Stock Exchange is generally constructed in accordance with the mature model of the Shanghai and Shenzhen markets, including the scope and conversion rate of margin securities, rights and interests processing, and information disclosure, which are consistent with the Shanghai and Shenzhen markets.
It is worth noting that, considering the market characteristics of the Beijing Stock Exchange, the differences in its margin financing and securities lending systems are mainly reflected in two aspects. One is the connection between the transfer boards. The transfer mechanism is a characteristic institutional arrangement of the Beijing Stock Exchange. In order to make the connection between the margin financing and securities lending system of the Beijing Stock Exchange and the transfer system, the “Detailed Rules for Margin and Securities Lending” clarifies that the scope of the target stock will be adjusted for the transfer of the target stock. Second, the refinancing system will not be implemented for the time being. Refinancing is a supplement to the margin financing and securities lending system. In order to steadily promote the two financing business, the Beijing Stock Exchange will launch the refinancing system in the next stage in a timely manner according to the implementation of the business and the needs of market development.
The relevant person in charge of the Beijing Stock Exchange said that, considering the structural characteristics and liquidity level of the Beijing Stock Exchange at this stage, the Beijing Stock Exchange will implement a “two-step” strategy, and will only launch the basic business of two financings at the beginning, and then launch the transfer following the operation is stable. Rongtong ensures that the financing business will be the main business in the initial stage following the implementation of the two financing business. The securities lending and securities lending sources in the market are limited, and the overall leverage level is low, reducing the overall market volatility risk.
[Editor in charge: Diao Yunjiao]
