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5 firms win rights to deal in margin trade

CHINA'S securities regulator gave the green light today to the second batch of five securities firms to deal in margin trading and short-selling and lowered threshold to attract more firms to take part in the pilot program.

The China Securities Regulatory Commission approved applications from China Galaxy Securities Co, Shenyin Wanguo Securities Co, Orient Securities, China Merchants Securities Co and Huatai Securities Co, Xinhua news agency said today.

The commission also lowered the threshold for securities firms to engage in the program by reducing net capital requirement from 5 billion yuan (US$732.18 million) to 3 billion yuan in the past six months.

Besides 11 firms that have already been approved to deal in the program, 15 securities firms are qualified for the new standard, including Essence Securities, Changjiang Securities, Ping An Securities and Guoyuan Securities.

Margin trading lets brokers fund stock purchases by individual investors. Short selling allows retail investors to sell borrowed securities with an aim to buy them back later at lower prices to profit from the difference.

The margin trading and short selling pilot program is initially limited to six brokerages - CITIC Securities, Guotai Junan Securities, Haitong Securities, Guosen Securities, Everbright Securities and GF Securities.



 

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