SHANGHAI: China’s securities regulator mentioned on Tuesday (Feb 6) it might droop brokerages from borrowing shares for lending and cap the scale of so-called securities refinancing, as a part of additional efforts to curb short-selling.
The watchdog can even ban securities lending to traders who promote shares on the identical day of buy, and vowed to crack down on unlawful arbitrage utilizing short-selling.
Chinese authorities have introduced a raft of measures to assist share costs after the market plunged to five-year lows final week in an ailing financial system.
The recent measures got here a day after the China Securities Regulatory Commission (CSRC) vowed “zero tolerance” towards malicious quick sellers, warning those that dare flaunt the legislation will “lose their shirts and rot in jail”.
The CSRC mentioned on Tuesday that no new enterprise could be allowed for securities refinancing, wherein brokerages borrow shares and lend them to shoppers for brief promoting. Existing companies could be steadily wound up.
In addition, the watchdog urges brokerages to tighten scrutiny over shoppers’ buying and selling behaviours.
Under China’s rules, shares can’t be offered on the identical day of buy, however some traders skirt the principles utilizing borrowed shares. The CSRC mentioned that such merchants could be banned from borrowing shares.
Recent efforts to curb short-selling have led to a 24 per cent drop within the securities lending enterprise, to 63.7 billion yuan, the CSRC mentioned.