Sudden Increase In Financing Affects The Initiative Of The Big Exchanges To Reduce Leverage

The Shanghai Stock Exchange and Shenzhen Stock Exchange also announced that, with the approval of the China Securities Regulatory Commission, the detailed rules for the implementation of the two cities' margin trading procedures will be revised, specifically raising the minimum margin of financing margin for investors to buy securities from the original 50% to 100%.

The new regulations have been implemented since November 23rd.

The A share market was lower and lower. At the close, the Shanghai Composite Index fell 3600 points at 3580.84 points, down 1.43%, and the Shenzhen composite index fell 1.85%.

Zhang Xiaojun, a spokesman for the securities and Futures Commission, said that raising the margin of financing margin and reducing the lever level of new open positions would help prevent systemic risks and promote sustained and healthy development of the market.

The Shanghai Stock Exchange explained that, with an example of 1 million yuan of funds, when the margin of margin was 50%, customers could use 1 million yuan margin to finance securities companies 2 million yuan to buy securities. The leverage ratio of the financing paction was 2 times. When the margin of financing margin was raised to 100%, customers could only buy securities with 1 million yuan from the securities company when the margin of 1 million yuan was raised. At that time, the leverage ratio of financing pactions was 1 times.

More popular, that is, 1 million yuan of self financing, before lending up to 2 million yuan, which can theoretically buy 3 million yuan shares, and the new regulations will have 1 million yuan in theory, which can only buy 2 million yuan stock in theory. This new regulation directly leads to the reduction of the bar and the reduction of the amount of financing funds into the stock market. The A share market is equivalent to the capital market throttle, and the market will return to the era of stock capital gambling in the future. The action should be regarded as a medium and short term bad luck. If coupled with the short-term impact on Investors and the deterrent effect, the volatility of the A share market is likely to increase next week, "said Chen Jiang, a private Shanghai private trader."

It is worth mentioning that the revised rules of implementation are not immediately implemented but postponed until November 23rd, leaving a week of pition time.

In addition, the new rules also make it clear that "adjustment" is limited to newly opened financing contracts, and the margin trading contracts that have been put into effect before implementation are still in accordance with the relevant provisions before adjustment. Investors do not need additional margin or close positions. The existing margin trading contracts can also be extended according to relevant regulations and contractual stipulations.

"From this point of view, regulators still have a sense of care for the stock market. Personal understanding, regulators are indirectly telling the market. At present, the stock market needs healthy Buffalo," mad cow "and" fast bull "are all bad.

Beijing Shennong investment general manager Chen Yu also optimistic to the 21 media reporters, with the IPO restart, the stock supply will be liberalized. At this time, the control of capital supply will be amplified artificially, which will promote the return of market valuation and usher in a real slow bull.

He said frankly that Shennong investment is now officially turning over.

In fact, in recent years, as the stock market has warmed up, many brokerages have adopted measures such as lowering the margin line and closing line. Although they are intended to balance the development of internal financing and securities lending, they are generally "encouraging" in the form of margin trading.

"Raising the margin ratio, modifying the trading rules to reduce leverage, and more effectively guide the rational investment of the market," said deputy director general of a fund company in Shanghai.

It should be pointed out that the stock market is the largest increase in stock financing in recent years, but with the continuous rise of these stocks, the mood of the investors has been cautious. Recently, some securities companies have shown signs of net repayment of financing.

Explains that the main reason for the revision of the implementation details of the margin trading is that the scale of financing and the volume of pactions have increased again in the near future as the market has warmed up.

Therefore, in order to effectively protect the legitimate rights and interests of investors and guard against systemic risks, it is necessary to implement counter cyclical adjustment, raise the margin ratio of financing, and appropriately reduce the lever level, so as to promote the sustained and healthy development of the market.

Since October 8th, the popularity of the Shanghai and Shenzhen two cities has been affected by many factors such as favorable policy support, increased number of investors and incremental inflow of funds, and the financing pactions in the two financial businesses have also been incorporated into the "toolbox" of many investors again.

Statistics show that as of November 12th, the balance of financing in Shanghai and Shenzhen two cities has achieved "eight consecutive liters", reaching 1 trillion and 160 billion yuan, compared with the level of 900 billion yuan in September 30th. In just a month and a half, it increased by about 200000000000 yuan, almost an average increase of nearly ten billion yuan per trading day.

With the rapid growth of the financing balance, the investors are buying more and more high price earnings ratio stocks, and the risk of holding single stocks is also increasing.

The stock market volatility from June to August this year, the most talked about factor is the purchase of leverage funds. "In order not to repeat the same mistakes, regulators have to prepare for the rainy day. On the one hand, they have the means of pmitting signals. On the other hand, they are also reducing the associated risks that the financing may continue to rise."

Since the implementation of margin trading, Shanghai and Shenzhen exchanges have repeatedly revised the rules for margin trading.

From the end of last year to August this year, regulators also carried out "guidance", including leverage reduction, for margin trading. However, this "guidance" is not for securities companies, but for investors to reduce leverage in pactions.