SHANGHAI: China’s securities regulator said on Tuesday (Feb 6) it would suspend brokerages from borrowing shares for lending and cap the size of so-called securities refinancing, as part of further efforts to curb short-selling.
The watchdog will also ban securities lending to investors who sell stocks on the same day of purchase, and vowed to crack down on illegal arbitrage using short-selling.
Chinese authorities have announced a raft of measures to support share prices after the market plunged to five-year lows last week in an ailing economy.
The fresh measures came a day after the China Securities Regulatory Commission (CSRC) vowed “zero tolerance” against malicious short sellers, warning those who dare flaunt the law will “lose their shirts and rot in jail”.
The CSRC said on Tuesday that no new business would be allowed for securities refinancing, in which brokerages borrow shares and lend them to clients for short selling. Existing businesses would be gradually wound up.
In addition, the watchdog urges brokerages to tighten scrutiny over clients’ trading behaviours.
Under China’s regulations, shares cannot be sold on the same day of purchase, but some investors skirt the rules using borrowed shares. The CSRC said that such traders would be banned from borrowing shares.
Recent efforts to curb short-selling have led to a 24 per cent drop in the securities lending business, to 63.7 billion yuan, the CSRC said.
Source: Channel News Asia