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As part of additional efforts to reduce short-selling, China’s securities regulator announced on Tuesday ( Feb 6 ) that it would suspend brokerages from borrowing shares for lending and cap the size of so-called securities refinancing.
The regulator vowed to crack down on illegal trade using short-selling and will also forbid securities lending to traders who sell shares on the same day of purchase.
After the business fell to five-year highs last week in an ailing business, Chinese authorities have announced a number of measures to help share prices.
The China Securities Regulatory Commission ( CSRC ) vowed “zero tolerance” against dishonest short sellers and issued a warning that those who disobeyed the law would “lose their shirts and rot in jail” the day before the new measures were implemented.
No new company may be permitted for assets refinancing, in which brokerages borrow shares and give them to clients for small marketing, the CSRC announced on Tuesday. Existing companies may eventually close.
The watchdog also urges companies to increase their oversight of consumers ‘ trading activities.
Stocks may be sold on the day of buy in China, but some investors use borrowed shares to get around this. For merchants would be prohibited from borrowing shares, according to the CSRC.
According to the CSRC, recent efforts to reduce short-selling have resulted in a 24 % decline in the securities lending industry, reaching 63.7 billion yuan.