THEME OF THE DAY

CSRC Regulatory Campaign Continues - Mind the subtle policy tone change

Local media reported that on 6 May, the Securities Association of China (SAC) organized a seminar in Shanghai to discuss liquidity risk management. Mr. Zhang Yujin (assistant to CSRC chairman) attended the meeting and Mr. Nie Qingping (general manager of China Securities Finance Corporation) made suggestions on broker margin finance business, including 1) imposing a 4x cap on broker margin balance to its net capital, 2) reducing the collateral conversion ratio for overheated stocks (e.g. stellar returns, super high P/E etc.), 3) tightening client risk control standards, and 4) limiting the size of margin financing beneficiary rights (MFBR) repo operation with banks.