In a recent move, the regulator has tightened its grip on the refinancing business. This is not only a response to the voice of the market, but also a step towards a radical improvement of the trading regulatory system, taking into account the actual situation of the country and the special needs of the market.
Specifically, the regulators have proposed three key measures to strengthen the supervision of securities lending and borrowing business. First of all, they decided not to increase the size of new refinancing bonds, which means that the scale of new ** company refinancing bonds will be suspended, and the existing balance of refinancing bonds will be used as the upper limit for future operations. In addition, the company is required to strengthen the management of customer trading behavior, in particular, it is strictly forbidden for investors who attempt to conduct intraday rotation trading (i.e., disguised T+0 trading) through securities borrowing and lending. Finally, the regulator stressed the importance of continued strengthening of regulation and enforcement, especially against those who use securities lending and borrowing to engage in improper arbitrage practices.
This move has attracted a certain amount of attention in the industry. For example, several large ** companies such as Nanfang ** and E Fund ** quickly expressed their stance and announced that they would strictly implement the relevant guidance of the China Securities Regulatory Commission, suspend the new scale of refinancing** lending, and prudently handle the existing refinancing ** lending business to ensure the smooth progress of the business.
Market analysts expect that these new rules will lead to a significant decline in the scale of refinancing securities. While securities lending and borrowing play an active role in helping the market detect**, prevent sharp stock price volatility and maintain market stability**, refinancing is often seen as a risk factor in the market in the current investor sentiment.
Judging from the data, the scale of securities lending and refinancing business is still at a low level relative to the overall market.
According to the data analysis of Xu Kang, chief analyst of the financial industry of Huachuang**, the refinancing business accounts for 80% of the securities borrowing and lending sources, which shows that the contribution of the refinancing securities business to the market securities lending and borrowing is extremely important.
The regulator's decision to suspend the scale of refinancing securities of newly added ** companies is essentially a "cap" on the source of securities lending and borrowing in the market, which will significantly affect the scale and operation of securities lending business. In particular, when the main source of securities in the market is the self-owned securities of the proprietary market on the one hand, and the external investors borrowing securities through the CSI Gold refinancing securities on the other hand, the restrictions on the scale of the refinancing securities directly affect the supply of securities borrowing and lending.
This "cap value" setting, coupled with the prudent attitude of institutions such as public offerings** and the prohibition of T+0 on securities lending, is expected to have a significant dampening effect on the demand for securities lending, which in turn will lead to a significant decline in the scale of securities lending. From the perspective of market reaction, this is seen as good news, as it helps to reduce excessive speculation in the market and promote the healthy and stable development of the market.
At the same time, the regulator not only pays attention to the immediate reaction of the market, but also strives to fundamentally optimize the trading supervision system to meet the needs of national conditions and market conditions. Through continuous institutional optimization and regulatory measures, the regulator has demonstrated its determination to protect the interests of investors and promote the stable development of the capital market. Especially in the current situation of increased volatility in the A** market, these adjustment and optimization measures have played an important role in stabilizing market sentiment and enhancing investor confidence.
The regulator's ongoing focus on market stability and investor protection is reflected in a series of adjustments to securities lending and refinancing** lending transactions since 2023. These measures are designed to refine and strengthen the market regulatory framework to respond to market changes and potential risks.
First of all, increasing the margin ratio is an obvious measure to strengthen the management of the risk of securities borrowing and lending. In particular, for investors such as private equity ** investment, when selling securities lending, the margin ratio of securities lending and borrowing is set at no less than 100%, which undoubtedly increases the cost of using financing for short selling operations, thereby curbing potential market manipulation and excessive speculation to a certain extent. At the same time, the restrictions on securities lending and lending by senior executives and core employees of listed companies, as well as the supervision of improper profit methods such as large-scale arbitrage with the help of securities lending, have further ensured the fairness of transactions and the transparency of the market.
The October 2023 measures were further supplemented by the January 2024 adjustments. The decision to completely suspend the lending of restricted shares, as well as the adjustment of the market-based declaration of refinancing securities from real-time availability to next-day availability, are all restrictions on the efficiency of securities lending and borrowing transactions. The purpose of these adjustments is to slow down the overreaction of the market and reduce the volatility of the market by prolonging the response time of trading. In particular, the implementation of a moratorium on the real-time availability of refinancing lending** can be seen as a precautionary measure to prevent market participants from taking advantage of real-time borrowing and lending for quick speculative transactions.