BEIJING, Oct. 21 (Xinhua) -- China Securities Finance Co., Ltd. (CSF), the only financial institution that operates margin financing loan business in China's capital market, started the pilot market-oriented margin funds loan services reform upon regulatory approval on Thursday, showed an announcement posted on CSF's website.
CSF took the step together with a fee rates cut of 40 basis points (bp) for all terms of margin funds loan services available to better satisfy the diversified and low-cost financing demand of securities companies.
Margin funds loans here refer to loans provided by securities financial companies with their self-owned funds or funds raised via bond issuance or other ways to securities brokers for financing purchase of listed securities by the latter's clients.
CSF sets three bands of terms for margin funds loans such as one day to 28 days, 29-91 days and 92-182 days, with also corresponding upper and lower fee rates limits.
As local newspaper Securities Times reported, the upper limits are offered to fend off excessive volatility of fee rates while the lower limits will be fixed and published by CSF pursuant to representative fair interest rates on money market such as those of interbank certificates of deposit (CDs).
Qualified securities firms can choose, as they need, the term of their margin funds loans to be borrowed within the range of one day to 182 days and bid for the margin funds loans within the given upper and lower fee rates limits.
Currently, CSF has thoroughly collected opinions of market participants and completed related business and technological plans design. Later, CSF will pick one band of terms to pilot bidding in facilitating deal making and for funds demand in other bands of terms, the current transaction methods will prevail during the pilot period.
Securities Times citing Xue Jirui, member of the executive board of CITIC Securities, said that the reform will provide more freedom in fund using terms and foster the market-driven changes of the fee rates of margin funds loans.
With foreseeable higher transaction efficiency and shorter dealing cycle, the pilot market-oriented margin funds loan service reform is expected to contribute to guiding funds into the capital market in a more orderly way and boosting development of margin transaction, Xue noted.
Margin funds loan services are supportive systems and arrangements to margin trading and were rolled out in China in 2012. By the end of September, margin funds loans have provided a total of 1.7 trillion yuan of funds to support margin trading business of securities brokers. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
A single purchase
