LAWFUEL – Law News Network –
Name: Implementation Rules for Margin Financing and Securities Lending Business on Trial Basis in the Shanghai Stock Exchange and the Shenzhen Stock Exchange (上海证券交易所、深圳证券交易所融资融券交易试点实施细则) (“the Implementation Rules”)
Issuing authority: Shanghai Stock Exchange, Shenzhen Stock Exchange
Effective date: 21 August 2006
Subject: margin financing and securities lending business
Further to the Measures for the Administration of Margin Financing and Securities Lending Business of Securities Companies on Trial Basis, promulgated by the China Securities Regulatory Commission (“CSRC”) and effective from 1 August 2006, the Shanghai Stock Exchange and the Shenzhen Stock Exchange has each issued the Implementation Rules to clarify the relevant matters in the process of margin financing and securities lending, such as standards for selecting subject securities, form of management of deposit and security, information disclosure and risk control indicators. There are no material differences between the Implementation Rules of the Shanghai Stock Exchange and the Shenzhen Stock Exchange.
In addition to CSRC approval for margin financing and securities lending business, a securities company is also required to apply to the relevant stock exchanges for approval to undertake such business. Such business may only be conducted via a designated trading seat.
Subject securities may include shares, securities investment funds, bonds and other securities listed on, and acknowledged by, the relevant stock exchange. The stock exchanges will, in due course, release a list of the subject securities which may be used as subject securities during the trial period.
Subject securities and other securities mentioned above may be used as a deposit, subject to the relevant discount rates.
Securities companies engaging in margin financing and securities lending business are required to make daily and monthly reports to the relevant stock exchange.
The Implementation Rules provided certain risk control indicators. For example, the relevant stock exchange may suspend trading of any single security if the amount of margin financing for such security reaches 25% of its market value.