On August 27, 2023, with the CSRC’s approval, SZSE amended Article 4.5 of the Implementing Rules for Margin Trading and Short Selling (Revised in 2023) to reduce the financing margin ratio from 100% to 80%, which will be officially implemented from the market close of September 8. This is a concrete measure taken by SZSE to earnestly implement the CSRC’s package of policies on “activating the capital market and boosting investor confidence”.
The financing margin ratio refers to the ratio of the margin paid by investors at margin buying to the amount of margin trading. For example, when the financing margin ratio is 100%, investors can borrow up to CNY 1 million from the securities companies to buy securities with a margin of CNY 1 million. When the financing margin ratio is reduced to 80%, investors can borrow up to CNY 1.25 million from the securities companies to buy securities with a margin of CNY 1 million. The margin ratio for short selling remains unchanged, i.e. not less than 50%.
In particular, it should be noted that the adjustment of the financing margin ratio is not only applicable to new financing contracts. Securities companies can also reduce the margin ratio of outstanding financing contracts before the implementation of the revision of the Implementing Rules according to the agreement with investors. At the same time, subject to compliance with the regulatory requirements, securities companies can independently determine the specific ratio according to customers’ and their own risk tolerance. Investors are kindly reminded to pay attention to the risks of margin trading and short selling and establish a rational investment concept.
