Global Times｜CSRC vows to enhance regulation of margin trading and securities lending for market stability
The China Securities Regulatory Commission (CSRC) on Sunday vowed to further evaluate and refine rules for margin trading and securities lending, and enhance regulation of illicit short-selling to ensure market stability.
Some self-media stated that the recent stock market slide was due to retaliatory moves in the securities refinancing market as the quantity of securities lending and borrowing increased by nearly 170 million shares on June 12.
In response, the CSRC said that the quantity of securities lending that increased on the day was mainly due to the semi-annual adjustment of index constituent stocks, noting that the newly added lending data from individual trading days cited by self-media overlooked the situation of stock retrievals and reduced balances from previous periods.
Data showed that there were 280 million shares newly lent on June 11 and 170 million on June 12. At the same time, 860 million shares were retrieved on June 11 and 50 million on June 12.
As a result, the net decrease in the securities lending balance over two days amounted to 460 million shares, and the total securities lending balance for the week decreased by 5.4 billion yuan ($744.33 million), a 14 percent decline, said the CSRC.
As of Friday, the total securities lending balance across the market was 34 billion yuan, a decrease of 53.6 billion yuan from the policy announcement on February 6, marking a decline of 61 percent. This was the lowest level so far this year, with securities lending balances accounting for 0.05 percent of the A-share market's circulation value.
Since 2023, in response to market concerns regarding margin trading and securities lending, the CSRC has implemented a series of measures, including prohibiting the lending of restricted shares, reducing the efficiency of securities lending, and strictly prohibiting the use of margin trading for disguised T+0 trading, among others, said the commission.
On February 2 this year, the CSRC announced plans to suspend securities companies' new business involving lending certain shares for short-selling in accordance with the law, and it would gradually settle the existing business.
Next, the CSRC will comprehensively evaluate and refine the rules for margin trading and securities lending, and strengthen countercyclical adjustments for these activities.
Simultaneously, it will continue to enhance regulatory oversight and supervision of illegal activities to stabilize market operations.