The first arrow is the large expansion of the two exchanges on August 9. The number of shares in the two exchanges increased from 950 to 1600, and the minimum maintenance guarantee ratio was cancelled at the same time.
The third arrow is on Wednesday, when the securities companies cut the transfer financing rate by 80 basis points. In the industrys view, the three arrows announced the substantive action of the regulators to attract incremental funds into the market.
First arrow: the large expansion of the two integration targets, involving major amendments to several provisions of the maintenance ratio
In order to further improve the risk management of margin trading business and promote its long-term stable development, with the approval of the China Securities Regulatory Commission, the two exchanges have amended some provisions of the Implementation Rules of Margin trading (revised in 2015) concerning the maintenance of guarantee ratio. The Shanghai and Shenzhen exchanges simultaneously expanded the scope of the two financial tenders, expanding the number of the two financial tenders from 950 to 1600.
According to the analysis of the reporters, the most critical revision to the original rules is to cancel the minimum maintenance guarantee ratio of 130% and introduce the factor of other guarantees into the calculation of maintenance ratio, so as to avoid the risk of closing the warehouse due to the low maintenance ratio of customers and reduce the operational risk of securities firms. In order to prevent investors from replacing cash and securities with other guarantees and to prevent the bad taste of the two financial services, cash and securities are still taken into account in customer cash withdrawal, regardless of other guarantees.
It is worth noting that the revised rules, on the one hand, add other collateral as a factor to consider the maintenance ratio, on the other hand, stipulate that securities firms can agree on the maintenance ratio with customers, which will test the risk control ability of securities firms.
Amendment 1: Adding other collateral
In view of the amendment of Article 42 of the Implementation Rules, the formula for calculating the proportion of guarantee in margin trading has changed, and the factors affecting the addition of other guarantees are included.
Specifically, the newly revised clause is that members should monitor the collateral submitted by customers as a whole and calculate the percentage of the collateral they maintain. Maintaining the guarantee ratio refers to the ratio between the value of the customers collateral and its margin-lending debt. The formula is as follows:
Maintain guarantee ratio= (total market value of securities in cash + L/C securities account + value of other collateral)/(amount of financing purchase + quantity of securities sold through securities trading * current market value + interest and fee sum).
What is other collateral? According to the exchange, other collateral refers to the collateral other than cash and securities in credit securities account submitted by the customer after the members approval when the customers maintenance guarantee ratio is lower than the minimum maintenance guarantee ratio. Its value is calculated according to the valuation method agreed between the member and the customer or the valuation result approved by both parties.
The head of credit business of securities firms told reporters that this concept had been put forward in the industry as early as 15 years after the stock market crash. Now it has been implemented in the regulations. For investors, there is an additional chip to avoid securities firms closing their positions because of the low maintenance ratio. For securities firms, it is also an effective means to reduce risk. However, he believes that securities firms need to establish a better asset appraisal system.
Amendment 2: Current withdrawal does not consider other collateral
For the clause of other guarantees, the Rules for Implementation have also been amended in Article 44. According to the previous content, when the maintenance guarantee ratio exceeds 300%, customers can withdraw cash from the available margin balance or securities to offset the margin, but after withdrawal, the maintenance guarantee ratio must not be less than 300%. Except as otherwise provided by this Institute.
In this regard, the revision shows that when the maintenance guarantee ratio of the total market value of the securities in cash and letter of credit securities accounts exceeds 300%, customers can withdraw cash from the available margin balance and securities to offset the margin, but only calculate the maintenance guarantee ratio of the total market value of the securities in cash and letter of credit securities accounts after withdrawal. The number of cases should not be less than 300%.
For other guarantees, when the new maintenance guarantee ratio exceeds the agreed value between members and customers, customers can cancel the guarantees of other guarantees, but the maintenance guarantee ratio after the cancellation of guarantees shall not be lower than the agreed value between members and customers. Except for securities that withdraw cash, offset margins, or relieve other collateral, etc.
The head of the credit business of the above-mentioned securities firm said that if other collateral was also included in the consideration of cash withdrawal, it would be possible to withdraw cash and securities in advance, that is, to reduce the quality of collateral, because the quality of other collateral may not be as good as cash and securities, and if withdrawn in advance, it may become a pledge loan in disguise. Money business, affects the essence of the two financial services.
Amendment 3: Cancellation of the 130% Minimum Maintenance Guarantee Ratio
Earlier this year, regulators said they wanted to cancel the minimum maintenance guarantee ratio of 130%. The latest revised rules stipulate that securities firms and customers agree on the minimum maintenance guarantee ratio requirements.
Previously, Article 43 of the Implementation Rules stipulated that the percentage of customer maintenance guarantees should not be less than 130%. When the customer maintains the guarantee ratio below 130%, the member shall notify the customer to add the collateral within the agreed time limit. After the customer has been approved by the member, he can submit other securities, real estate, equity and other assets besides the margin securities. Members may agree with customers to maintain the guarantee ratio after additional collateral.
Compared with the previous hard number requirements, the newly revised content gives the right of judgment to institutions and markets, and determines the minimum proportion requirement through prudent assessment, which is more flexible and flexible in form.
Chang Depeng, a spokesman for the Securities Regulatory Commission, said that the purpose of the adjustment was to change the one-size-fits-all approach, to transform the mandatory requirements of supervision and self-discipline into the inherent needs of independent risk management of securities companies, and to leave it to securities companies and customers to agree independently. For customers with strong credit and better liquidity, securities companies can properly reduce the minimum maintenance guarantee ratio after evaluation, and vice versa.
Because of the introduction of other collateral, securities firms can agree on the maintenance ratio with customers, test the risk control ability of securities firms, and may also agree on two maintenance ratios.
The Shanghai Stock Exchange also indicated that before the implementation of the revised Implementation Rules, members and customers had signed financing and securities trading contracts. Members could negotiate with customers or adjust the relevant agreements in other legal ways according to the requirements of the revised Implementation Rules. The revised Implementation Rules were implemented on 19 August.
The above-mentioned securities firm credit business personage indicated that the revised rules, on the one hand, add other collateral as a factor to consider the maintenance ratio, on the other hand, stipulate that securities firms can agree on the maintenance ratio with customers, which will test the risk control ability of securities firms.
Amendment 4: Increase the number of shares in the two financial tenders to 1600
Specifically, there are 275 new trading targets in Shenzhen and 375 new trading targets in Shanghai. The scope of 43 trading open-ended index funds on the Shanghai Stock Exchange remains unchanged. (A list of stocks is attached at the end of the article)
A person in charge of credit business department of northern medium-sized securities firms said that the stock exchange should expand the scope of the two financing targets. For investors of the two financing companies, there will be more investment options and expand the scope of the two financing; for securities firms, it will enhance the size of the two financing companies.
Liangrong people said that this is a combination of policies to boost the market. After expanding the scope of the target, the market may pay more attention to Liangrong. The impact on the market is that previously underperforming stocks have received more attention from leveraged funds being financed. Stocks that could not be financed before can now be financed on the spot, and the market will pay more attention to them.
Second arrow: revise the calculation standard of risk control indicators of securities companies to enhance the leverage of securities firms
The Securities Regulatory Commission (SFC) openly solicited opinions on the revision of the Computing Standards for Risk Control Indicators of Securities Companies (hereinafter referred to as the Computing Standards) on the 9th. This adjustment mainly involves five tables in the Computing Standards, namely, the preparation of venture capital, the total amount of assets inside and outside the statement, the liquidity coverage rate, the net stable capital rate and the risk control indicators To clarify the new business calculation standards and improve the completeness of wind control indicators.
According to Chang Depeng, a spokesman for the Securities Regulatory Commission, the current risk control index system plays an important role in guiding securities companies to improve their risk management level, effectively prevent and control risks through capital constraints, based on three yearspractical experience. However, with the continuous development of the industry and the adjustment of business structure, the related risk types are becoming more and more complex. The measurement standards of wind control indicators need to be further improved and clarified to meet the needs of risk management under the new situation. Therefore, it is necessary to revise the Computing Standards to support the sustained, stable and healthy development of securities companies. This revision is mainly based on four principles:
One is to maintain the overall framework unchanged and adjust local indicators. In view of the overall completeness of the current standard system for calculating wind control indicators and the good implementation effect, it has been widely recognized by the industry. Continue to maintain the overall framework, only according to market conditions and industry development needs to improve some indicators.
The second is to implement counter-cyclical regulation and guide the industry to optimize capital allocation. According to the risk characteristics of different businesses and products, we should adjust the indicators with leniency and strictness, give full play to the guiding role of the calculation standard of wind control indicators, improve the liquidity of capital market, and support the healthy and orderly development of the industry.
Third, to clarify the new business calculation standards and improve the completeness of wind control indicators. According to the market development and the new business and new situation in the industry practice, the relevant indicators calculation standard should be clarified in time to ensure the full coverage of all kinds of business by the wind control indicators.
Fourthly, we should improve the differentiated regulatory indicators and improve the capital operation space of high-quality securities companies. Combining with the results of classification and evaluation of securities companies, we should strengthen differentiated supervision and enhance the capital operation space of securities companies with effective compliance and business expansion ability.
Third arrow: the securities company lowered the transfer financing rate of 80BP
Just on August 7, China Securities Blonde announced that the overall transfer financing rate would be lowered by 80BP from August 8, 2019. Among them, the 182-day rate would be lowered from 4.3% to 3.5%, the 91-day rate would be lowered from 4.6% to 3.8%, the 28-day rate would be lowered from 4.7% to 3.9%, and the 14-day and 7-day rate would be lowered from 4.8% to 4%.
At that time, the head of credit business of large securities firms told reporters that this represented the protection of the whole market by the regulatory authorities and a signal of policy combination.
The head of the credit business department of the above-mentioned medium-sized securities firms said that the reduced transfer rate is slightly lower than the market financing rate, but with the cost of margin, the rate of borrowing money from other financial institutions is basically the same as that of securities firms. In his view, the more information that China Securities Fund has delivered to the market is that China Securities Fund is well-funded, which can provide ammunition to the stock market and provide strong support for the two-finance business.
Securities firms in China have sorted out the new shares as follows:
Source: China Responsible Editor of Securities Dealers: Yang Bin_NF4368