The Securities And Futures Commission Called For &Nbsp; Stocks Were Selling Short.

financing Margin trading In the past year and a half, the operation of almost all financial institutions in the market has come to an end. If the margin trading and stock index futures business started in 2010, so that only a short hand in the A share market can be made, then the introduction of refinancing will give the short hand a powerful source of energy and make the two sides more balanced.

After a year and a half of intense discussions in the market, refinancing quietly knocks on the door of the A share market.

On the afternoon of August 19th, the securities and Futures Commission issued the "trial and Approval Measures for supervision and management of refinancing business" and made public comments.

The draft stipulates the responsibilities and organizational structure of securities finance companies, refinancing business rules, refinancing funds and securities sources and so on, and it will produce "one stone stirs up thousands of waves" in the A share market.

I remember that in the spring of 2010, the introduction of margin trading and stock index futures meant that A shares introduced short selling mechanism, which had become the last straw of A shares. After the launch of stock index futures in April 15th, the Shanghai Stock Index turned downward and launched a round of two and a half months of adjustment, most of which fell to nearly 800 points.

After the era of refinancing, Broker Collective assets management plans, funds, insurance, trusts, social security funds, enterprise annuity and other institutions' shareholders' securities can be used as the source of securities lending. Some of the chips that were originally thought to be out of circulation, such as Huijin and China Petroleum Group, could also enter the market. In this way, not only can we increase the supply of the market, but also change the situation of financing a long foot and short selling securities.

Will refinancing have the same lethality as last year's margin trading and stock index futures? The answer is not necessarily.

From the Asian market similar to the A share market, the introduction of the refinancing system has different effects on the various markets, mainly related to the timing of the launch. The trend of the market is mainly based on the macro environment of various countries. For example, when Malaysia launched the global liquidity surplus in 2007, despite the short selling mechanism, the market continued to rise sharply. In the long run, the introduction of a complete margin trading mechanism in the securities market will not have a negative impact on the stock market. On the contrary, it can reduce the volatility in the stock market and stabilize the volatility of the stock market.

It is worth mentioning that in order to make the refinancing smoothly landing and guarantee the normal spanaction of the market, the SFC, especially in the initial stage of the pilot, drew the line of borrowing and lending amount for margin trading, such as requiring that the maximum amount of single securities of a single securities company can not exceed 10 million shares per day. This means that the psychological impact of the increase in the supply of coupons may be greater than the actual impact in the initial stage of refinancing.

Although refinancing will not change Stock market index Long run trend, but without doubt, it will bring revolutionary changes to the market.

The US is perhaps the most mature capital market in the world. Credit spanactions were introduced as early as 1933. Since 1950, various hedge funds have sprung up, and have produced various strategies such as relative value, short stock and event driven, and many legendary figures of Wall Street have been born.

Although the A share spanfer has not yet arrived, institutional and private market participants have begun to prepare for the war. Even when securities dealers issue financial products, they also have launched an arbitrage asset management plan.

It can be predicted that investors will face more choices and challenges and opportunities in the A share market in the future.

[market influence]

Credit spanactions will increase significantly after the implementation of refinancing.

After the opening of the margin trading in March 31, 2010, the two businesses appeared explosive growth along with the opening of the business scope. However, because securities companies can only use their own securities for margin trading, the shortage of vouchers has become a bottleneck restricting the development of securities lending businesses. At the same time, it makes the A share market appear more and more short and short.

Statistics show that as of last Thursday, the balance of margin in the Shanghai and Shenzhen two cities totaled 33 billion 229 million yuan. Among them, the balance of financing is 32 billion 969 million yuan, accounting for about 99%, and the margin balance is only 258 million yuan, accounting for 1%.

From the periodic reports of listed brokerages, many brokerages have increased the allocation of heavyweights in their own investment in order to develop securities lending businesses. However, when the market falls, the securities brokers will invest in the securities to investors, which means they have to bear the loss of market capitalization. This makes the securities companies very cautious when developing the securities lending business.

After the introduction of refinancing, Coupon source The supply problem will be solved. It can be seen from the draft refinancing opinion that, as long as there are no institutional shareholders who are prohibited or restricted to enter the securities market or participate in the refinancing of securities, and there are no major illegal records related to securities spanactions in the recent three years, they can act as securities lender of refinancing business, including eight categories, such as securities dealers, collective asset management plans, funds, insurance, trust, social security funds, enterprise annuity and other institutions. According to statistics, as at the end of 2010, the total value of stocks held by all institutions amounted to 12 trillion and 360 billion yuan.

Insiders pointed out that in these institutions, insurance, social security, state-owned shareholders and some long-term strategic investors may have stronger willingness to lend securities. Because these investors have a long and large stock holding period, through the refinancing mechanism, they can bring some low risk income to holders, without affecting the purpose of long-term holding. However, the difference in the proportion of institutional shareholdings will also have an impact on the supply of securities.

It is foreseeable that on the one hand, credit spanactions will become more common after the refinancing helps the A share market solve the problem of securities lending. On the other hand, incremental trading will further increase the trading activity and liquidity of underlying securities and increase turnover. And the short selling era of the A share market is coming.

In overseas mature markets, margin trading volume has accounted for 15%~33% of the total stock market volume. At present, it is precisely because the refinancing system is absent, plus the threshold of margin trading is relatively high, and margin accounts are very small in the total market turnover. For example, since August, the A share market has been trading at about 2 trillion and 300 billion yuan, and financing is only 16 billion 500 million yuan, accounting for less than 1%. {page_break}

Perfecting the short selling mechanism will lead to new investment strategies.

With the completion of the short selling mechanism, investors in the A share market will soon face new investment strategies.

Overseas mature markets provide us with a good reference. Take the United States as an example, in 1933, the United States launched the credit trading system. After 17 years of development, after the short selling mechanism was perfected, hedge funds were born in the United States in 1950, and also promoted the emergence of various investment strategies such as relative value, short stock and event driven.

Take the statistical arbitrage model in relative value strategy as an example. The basic principle is that two stocks have some historical correlation. When a correlation is broken at some time, a price difference between spanaction costs will be formed between the two stocks. At the same time, when a stock is bought by buying a stock, a short stock will be sold short and the other stock with high correlation will form a short position. The matching will form a "pair trading". This strategy can eliminate the risk of the two stocks in the industry or market and form a low risk arbitrage opportunity.

This strategy has gained successful experience in practical application. In an article entitled "statistical arbitrage model of FTSE100 index", A.N.Burgess pointed out that between June 1996 and May 1999, considering the spanaction cost of 0.5%, the statistical arbitrage of FTSE 100 index gained 67%. And leverage can enlarge profits.

Under the event driven strategy, hedge fund managers can focus on the possibility of reorganizing, acquiring, merging, bankruptcy liquidation or other special events. For example, the Shuanghui development in March, "lean meat essence" incident and the recent Hua Lan bio slurry station incident, suppose that when things happened just now, the study found that the situation may have a huge negative impact on the stock price, so it can be short at the beginning of the event. When profits are exhausted and stock prices are low, they can buy back and buy at bargain prices.

Wall Street's most famous event driven strategy hedge fund may be a traditional event driven long and short term fund invested in stocks, high interest rates and bad bonds. The only difference between it and the traditional hedge fund is that it generally does not hedge against its specific position. Instead, it makes a deep understanding of the corporate bond market and the underlying companies, and makes a single and multi - bet against different companies, avoiding the high leverage of CDS or other derivatives.

Statistics show that compared with the S & P 500 index, Brownstone has defeated the index almost all stages, and has not been overtaken by index. In the bull market, it can win slightly better than the superscript 500 index. It is even more difficult to maintain almost a trend of growth in the bear market in 2008. index Any impact.

Although the era of refinancing has not officially arrived, some brokerages have begun to make use of existing financing and securities lending, stock index futures and other tools to make new investment strategies.

A listed broker insider told the daily economic news (micro-blog) reporter that after obtaining the pilot of margin trading, they organized more research and development personnel to design investment strategies, and provided regular reports to customers in order to win more customers. "Our investment strategy is essentially a small hedge fund. Based on the analysis of the underlying and intrinsic value of underlying securities, we should buy and underestimate high-quality securities, and finance and sell overvalued general securities. Considering that margin trading contracts are generally six months' duration, we should analyze and judge the market trend and related factors in the next six months in order to avoid short-term risks. According to our tracking, this portfolio has obvious effect, and the yield is much higher than the Shanghai and Shenzhen stock index 300.

[overseas development]

The development of margin trading in the US market

In 1934, the US Congress passed the famous 1934 Securities Exchange Act. In order to prevent excessive abuse of credit spanactions, the provisions of the securities market should not be higher than 55% of the market value of the stock market, or not higher than the lowest market price of the securities in the first 36 months, and not higher than 75% of the current price. It also lists some prohibited illegal activities, such as stipulate that any stock exchange and brokers should not directly or indirectly participate in credit spanactions or arrange spanactions for customers. At the same time, the securities and Exchange Commission of the United States has established the strict management of credit spanactions. The Federal Reserve, as the regulator of securities credit trading, has exercised the duties of market supervision, and soon promulgated a number of rules to regulate the financial spanactions of financial institutions other than banks, securities companies, the brokerage business of credit spanactions, and the status of banks in margin trading and so on. These rules have improved the legal system of securities credit trading system.

The most important driving force for short selling of modern securities is the rise of investment enthusiasm in the stock market driven by economic prosperity in 1960s. In the early 1970s, stock exchanges and vouchers were committed to dealing with the bubbles brought about by securities trading, which led to the inefficiency of a large number of liquidity, resulting in the closure of some the Wall Street firm. In order to provide securities for arbitrage and short sellers in the market, the short selling industry, which was really used to provide trade links for the market, began to take shape. Because of the prosperity of option trading and the wide application of B-S option pricing formula in the capital market, and the management of stock borrowing and lending behavior based on options, short selling has been further developed. In addition, on the supply side, in 70s, the securities depository bank of the United States began offering securities lending services to insurance companies, corporate portfolios and charitable funds (micro-blog). Soon, the law also allowed pensions to participate in short selling of securities to get higher returns. By the middle of 80s, most institutional investors in the United States had used short selling, and short selling of securities had been fully institutionalized.

Credit exchange financing of New York exchanges in 1980~2007 balance From 147 billion US dollars to 39787 billion US dollars, an average annual compound growth rate of 12.5%. {page_break}

[business process]

8 types of institutions can lend out shares in the pilot scheme of refinancing business.

Margin trading has been opened for nearly a year and a half. With the increasing number of pilot brokerages and investors' familiarity, the margin trading market has begun to take shape.

But as the most important part of margin trading, refinancing is still in a blank state. Recently, the securities and finance Limited by Share Ltd prepared by the preparatory group of the China Securities and Futures Commission has issued some pilot securities dealers for margin trading and soliciting opinions. This led to stronger expectations for refinancing, which is expected to take place soon.

The daily economic news reporter has worked hard to obtain the thick draft of the "refinancing business pilot operation plan". This issue of securities weekly will join you in revealing the flow of refinancing business.

Securities intermediaries become intermediaries after refinancing

The so-called refinancing is that securities and financial companies borrow securities and funds from banks, funds and insurance companies, and then lend them to securities companies to provide securities and securities sources for securities companies to carry out margin trading. It includes two parts: margin trading and spanfer financing. But compared with the spanfer financing, the system arrangement and implementation plan design of the securities lending business is more complicated.

In order to achieve refinancing, we must borrow and lend. Specifically, there are no institutional shareholders who are prohibited or restricted to enter the securities market or participate in the refinancing of securities and the major illegal and illegal records related to securities spanactions in the recent three years. They can act as lenders, hand over securities to securities companies, and then give them to securities firms by securities and financial companies to carry out securities lending activities.

It is worth mentioning that the refinancing draft will be divided into eight categories: securities firms, collective asset management plans, funds, insurance, trust, social security funds, enterprise annuity and other corporate bodies.

An analyst who studies margin trading has pointed out that big companies like Huijin and China Petroleum Group should be included in other corporate bodies. Even if a securities financial company has some difficulties in determining the nature of the institution, they can participate in refinancing through the establishment of trust companies. This means that the supply of stocks on margin will increase sharply.

After the approval of a securities financial company, the shareholders of these institutions can share securities with the securities and financial companies through the block trading platform of the exchange. After obtaining the securities, the securities and financial companies can then spanfer to the securities companies to carry out margin trading. In other words, securities companies act as borrowers under the refinancing mechanism.

Like lenders, securities companies should apply for securities financing companies to apply for refinancing. After the completion of the audit, the securities and finance companies will give credit to the brokerages, and the broker will pay a certain amount of security to the securities and finance companies. Subsequently, securities dealers can engage in margin trading with investors.

It is worth mentioning that in order to smooth the landing of the refinancing and guarantee the normal spanaction of the market, the draft shows that the borrowing limit of the margin trading will be set at the beginning of the pilot stage, and every broker should also delineate the available margin margin according to their own guarantee size.

For example, the largest single reporting amount of securities companies is not more than 300 million yuan; the total amount of loans borrowed by a single securities company within a single day can not exceed 500 million yuan, and the broker whose net capital is less than 5 billion yuan can not exceed 300 million yuan. However, because of the short selling of lending, there are strict restrictions on lending. Judging from the draft, the largest number of single declarations should not exceed 5 million shares, and the maximum number of single declared stocks can not exceed 1 million shares under the total share capital of 500 million shares. The maximum volume of single securities can not exceed 10 million shares per day, and the total capital stock below 500 million shares can not exceed 5 million shares.

Specific restrictions on trading duration

The draft also made specific restrictions on the time limit for refinancing spanactions. Generally speaking, the refinancing contracts are fixed term contracts, and the securities and finance companies repay the securities and related expenses to the lenders on the maturity date of the refinancing contracts. In principle, the lender is not allowed to claim the securities back in advance. The securities companies repay the borrowed funds or securities and related costs to the securities and finance companies on the expiry date of the spanfer financing contracts and the refinancing contracts. In principle, they are not allowed to postpone the return of funds or securities.

Among them, there are three stages of the spanfer financing contract: 7 days, 14 days and 28 days respectively. The time limit for the integration of the loan and the contract is 3 days, 7 days, 14 days, 28 days and 182 days.

Although no extension is allowed in principle, it is also stipulated in the draft that other contract borrowers with other maturity can apply for extension except 182 days. "In order to control risks, the borrower can only apply for a 1 extension of the initial period of the refinancing business, and the total duration of the new and old contracts can not exceed 6 months after the renewal period. After the smooth operation of the refinancing business, it can be considered gradually liberalized, and the borrowers who have no credit scores for internal and external credit ratings can be allowed to apply for multiple exhibitions if the classification and supervision ratings are above class a.

If the securities finance company agrees to extend the application period, the renewal period of the refinancing contract will be extended according to the original spanfer financing contract. If the agreement is not agreed, the borrower will return the funds at the expiry date of the contract. The application for renewal of the loan contract is negotiated by a securities financial company and a securities lender.

In addition, the draft also stipulates that the lender should ask for repayment ahead of time: no lender will be allowed to return the contract for a period of 14 days or less. For a spanfer contract with a term of 14 days or more, if a judicial organ deals with the lender's creditor's rights in accordance with the law, it requires that the relevant securities lending contract be concluded ahead of schedule. If the securities that are merged into the securities exchange are bought and acquired, the listed company will not survive; if the listed companies that convert the securities into the stock market convene the general meeting of shareholders, they may apply for an early claim in advance for at least 5 trading days.

However, the ever-changing market and unexpected incidents can not be completely eliminated. Therefore, in the draft, the preparatory group of the securities finance company also made special consideration.

Specifically, if the underlying securities suspend trading and the maturity date of the securities lending contract has not yet been determined, the resumption of trading days or the resumption of trading days after the expiration date of the securities lending contract is still uncertain. If the securities are sold for 30 trading days after the contract is postponed, the securities company shall conclude the spanaction after the resumption. If the contract has been postponed for more than 30 trading days, the securities sold by the securities have not yet resumed, the securities financial company and the securities company and the lenders shall settle the maturity contract in cash respectively, that is to say, the closing price of the suspended securities shall be calculated according to the index method, and the index can be selected as Shanghai Composite Index, Shenzhen Component Index, Shanghai Shenzhen 300 index or stock industry association stock index. {page_break}

[market opportunities]

Event driven opportunities after refinancing

The pilot scheme of refinancing business has been sent to major brokerages. Among them, the insurance, fund, trust and other agencies can participate. This undoubtedly increases the amount of margin securities of the underlying securities, so how do investors operate? What situations can be involved and profiting? Participation threshold: more than 500 thousand yuan.

The pilot scheme for margin trading has been officially launched in March 31, 2010. At present, 25 brokerages are eligible for trial.

However, the threshold for margin trading in the pilot phase is quite high. Although, according to the requirements of the regulatory authorities, if investors apply for margin trading, they should satisfy the requirement that the broker's account should not be less than 18 months and the total assets of the account should be no less than 500 thousand yuan. However, the first batch of securities companies strictly set the risk requirement from 1 million to more than $1 million.

After that, the regulatory authorities announced that the securities and margin trading pilot of the securities company will be spanferred to the regular business stage, and the threshold for margin trading investors will also be reduced to more than 500 thousand yuan in securities account assets. At that time, a broker pointed out that the rapid increase of customer satisfaction would promote the growth of margin trading and the performance of listed securities companies.

Obviously, 500 thousand yuan is the watershed for investors to participate in margin trading.

Known as the official turning point of margin trading, the refinancing is ready to come out. This obviously boosted the recent margin trading business. The manager of a large brokerage business department said that the number of margin trading accounts increased significantly during the recent period.

It is worth mentioning that the refinancing draft shows that securities lenders are institutional shareholders of listed companies, including securities investment funds, insurance companies, securities companies, trust companies and so on. That is to say, after the refinancing is launched, the underlying securities of margin trading will be greatly enriched.

Focus on unexpected incidents

After that, the scope of the underlying securities has expanded significantly. How can investors earn more than 500 thousand yuan?

A long-term researcher who studied margin trading pointed out that the short selling mechanism was not perfect due to the small number of underlying securities, and investors could pay attention to unexpected events and make profits through margin trading in the case of substantial increase in underlying securities.

Indeed, some people have made a profit in the "lean meat" incident in Shuanghui. At that time Shuanghui development margin trading has been inactive, closing margin in March 14th only 400 shares. In March 15th, on the day of CCTV's broadcast of Shuanghui lean meat essence, 53 thousand and 100 stocks were sold suddenly. This means that some potential investors will realize that this is a potential profit opportunity after they see the news, so that they can intervene in short selling ahead of time. Sure enough, after Shuanghui resumed its trading card, it continued to decline. The most beneficial thing is the holders of these 53 thousand and 100 shares.

For example, in July of this year, the 5 apheresis stations in Guizhou province were suddenly shut down and suddenly lost more than half of their plasma sources, and their share prices were cut short. If investors could make short sales in a timely manner, it would be a good profit opportunity.

Insiders pointed out that after the launch of the refinancing package, the substantial abundance of the underlying securities will give investors more opportunities to invest in short selling stocks.

Small retail investors need to guard against short selling risks

It is worth noting that although refinancing can increase the opportunity for investors to make short money, it is actually a double-edged sword.

Insiders pointed out that for retail investors under 500 thousand yuan, we need to pay more attention to risks. Because small retail investors with no more than 500 thousand yuan can not participate in margin trading, that is to say, they can only do more at the moment and can not be short. When the stocks they buy are in the doldrums of the stock market, or if they sell short lots of securities, they will bring great risks to them.

For example, the above development of Shuanghui is understood to have only a broker and a limited number of traders who want to make short selling of Shuanghui development. This leads to the need for a negotiable securities holder to repay the securities and other people to continue to sell securities.

And when the refinancing is launched, both the scope of the underlying securities and the number of underlying securities will be greatly expanded. Then, the bad stocks may encounter more than one or two limit UPS, and there may be more limit UPS, which will make investors suffer heavy losses.

In addition, the previous trading board of the death squads in the speculation of small cap stocks, without too much capital can seal up the trading board, but after the introduction of the refinancing, if hype encountered a lot of short selling short selling, the stock price fell the same day.

The broker pointed out that after the introduction of refinancing, for some investors with less capital, blindly follow suit is even more undesirable. They need to study the fundamentals of stocks and intervene at the right price.