Novel ways to expand capital markets
By Winny Wang |
December 4, 2009, Friday
|
Print Edition
Print Edition
CHINA is looking into introducing several innovative financial products, including margin trading, in a bid to diversify the equity markets, the general manager of Shenzhen Stock Exchange said.
"A multi-level capital market has been formed with the introduction of the ChiNext market this year," said Song Liping, general manager of the Shenzhen bourse. "More innovative products, such as margin trading and short selling and stock index futures, are being considered."
Margin trading is the practice of borrowing money from a broker to purchase stocks, while short selling permits people who believe share prices will drop to sell borrowed securities and buy them back at a lower price to repay the lender.
The introduction of margin trading and stock index futures will help China's fund managers hedge against risks, Song said at a futures conference in Shenzhen on Wednesday.
The China Securities Regulatory Commission announced in October last year that it will soon launch margin trading and short selling, and it selected 11 brokerages to participate in the project on a trial basis. But the stock market slump ruined the plan.
With the A-share market rebounding about 80 percent this year, there has been speculation that margin trading may come soon, especially after the launch of the Nasdaq-style ChiNext board in October.
Song also noted that preparations for a cross-border exchange-traded fund based on overseas equity indexes have been completed.
"A multi-level capital market has been formed with the introduction of the ChiNext market this year," said Song Liping, general manager of the Shenzhen bourse. "More innovative products, such as margin trading and short selling and stock index futures, are being considered."
Margin trading is the practice of borrowing money from a broker to purchase stocks, while short selling permits people who believe share prices will drop to sell borrowed securities and buy them back at a lower price to repay the lender.
The introduction of margin trading and stock index futures will help China's fund managers hedge against risks, Song said at a futures conference in Shenzhen on Wednesday.
The China Securities Regulatory Commission announced in October last year that it will soon launch margin trading and short selling, and it selected 11 brokerages to participate in the project on a trial basis. But the stock market slump ruined the plan.
With the A-share market rebounding about 80 percent this year, there has been speculation that margin trading may come soon, especially after the launch of the Nasdaq-style ChiNext board in October.
Song also noted that preparations for a cross-border exchange-traded fund based on overseas equity indexes have been completed.
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