Photo taken on Aug. 24, 2020 shows the Shenzhen Stock Exchange in Shenzhen, south China's Guangdong Province.(Xinhua/Mao Siqian)
BEIJING, Aug. 10 (Xinhua) -- Notable cuts of minimum settlement reserve ratios from 16 percent to nearly 13 percent on average were announced in China earlier this month to further cheer up the stock market, reported Xinhua Finance recently.
Minimum settlement reserve, usually deemed as the required reserve for brokerages, refers to the minimum funds depositing in securities settlement participants' capital delivery accounts for securities trading and non-trading transactions.
Effective as from October 1, 2023, the cuts will take effect along with application of differentiated minimum settlement reserve ratios for stock-related business on Shanghai and Shenzhen stock exchanges, according to China Securities Depository and Clearing Corporation Limited (CSDC or China Clear), a joint venture established by the two bourses to handle their securities registration, clearing and settlement business.
Compared to the past rules, China Clear mulled reductions of minimum settlement reserve ratios at payment timings before nine o'clock, before 11 o'clock and after 11 o'clock to 13 percent, 15 percent and 16 percent respectively and at withdrawal timings before nine o'clock and after nine o'clock to 16 percent and 13 percent.
Industry experts said that the rarely-seen around three percent cuts of minimum settlement reserve ratios are expected to unlock capital in excess of 30 billion yuan.
As a move to further activate the capital market, the cuts can help improve the funds use efficiency of market players such as securities brokers and fund management firms so as to lower their trading costs and optimize settlement risk management to shore up market confidence. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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