Refinancing business refers to the financial company borrowing, raising funds, and then lending to the company to provide funds for the company to carry out margin financing and securities lending business, including refinancing business and refinancing business. From the perspective of a financial company, providing funds to a company and providing it with margin financing and securities lending business is called refinancing business.
Refinancing securities business refers to the financial company lending its own or lawfully raised securities to the company for short selling transactions. Refinancing business refers to the provision of funds by a financial company to market participants for them to handle financing transactions.
Benefits of refinancing business
1.Expansion of margin trading: The launch of the refinancing business has enabled the expansion of margin trading, increasing market liquidity and trading volume. This will help to enhance the activity and depth of the market and promote the stable development of the market.
2.Increased investment opportunities and risk management tools: The refinancing business provides investors with more investment opportunities and risk management tools.
3.Improve the efficiency of capital utilization: Refinancing business can improve the efficiency of capital utilization and reduce financing costs.
Drawbacks and risks of refinancing
1.The leverage effect of refinancing may increase market volatility and risk. In the event of a market downturn, over-leveraged investors may face huge losses, triggering a chain reaction and the risk of a crash in the market.
2.The refinancing business involves a large number of institutions and trading varieties, which is difficult to supervise. Securities companies are both participants in and regulators of the margin market, and there are certain conflicts of interest and regulatory loopholes.
3.There may be a risk of market manipulation by major shareholders using margin trading** to lend**, which may have an adverse impact on other investors.
4.The launch of the refinancing business has made the position of institutional investors in the market even more important. This may result in individual investors being exposed to greater investment risks and market pressures.