First six pilot brokerages ready for margin trading

07:31, March 25, 2010      

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The Shanghai and Shenzhen stock exchanges have officially approved six securities companies to pilot margin trading business, all of which will conduct final clearance tests this weekend.

The six securities companies are Guotai Junan Securities, Guosen Securities, CITIC Securities, Everbright Securities, Haitong Securities and GF Securities.

CITIC Securities has completed its report on business and monitoring, and began accepting investors' applications to open margin trading accounts today. As the first securities company to accept customer accounts, CITIC will become the first to launch margin trading.

The other five pilot brokerages are also in the midst of preparations based on the regulatory requirements of China Securities Regulatory Commission (CSRC), according to the Securities Daily.

All the securities companies are actively preparing for the final test of the whole network this weekend, after which most of the companies could launch margin trading for customer accounts next week.

Meanwhile, risk assessments will be enhanced and corresponding contingency plans will be examined.

Margin trading allows securities companies to lend stocks and money to investors to make bigger stock deals. And in this first phase, the six companies will not open accounts across the country, but will gradually open up in batches. The first few cities will include Beijing, Shanghai, Guangzhou, Hangzhou, Wuhan, Xi'an, and Nanjing.

The six companies will begin trading a pilot amount of up to 30 billion yuan ($4.39 billion). Among them, CITIC Securities estimates it will have the lion's share of 10 billion yuan, and Hai Tong Securities will start with 8 billion yuan.

After margin trading begins and profits are made, the margin amount will be expanded.

Source: Global Times

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