Shanghai Exchange Plans to Boost Chinese Securities Lending

The Shanghai Stock Exchange (SSE) has unveiled a new plan to promote securities lending in China.

The exchange will look to engage with institutional investors, including publically-offered (ipo funds and asset managers, to encourage the use of securities lending.

“Such investors shall be supported to engage in securities lending and securities lending of refinancing to propel supply and demand of securities sources in the market, on the basis of making risks controllable and protecting holders’ rights and interests,” the exchange says.

It will also launch market-oriented agreed application methods for securities lending to assist companies to develop securities lending according to client’s needs.

“The money from selling through securities lending can be used for purchasing or subscribing for cash management products of securities companies, money market funds and other high-liquidity securities recognised by stock exchanges,” it adds.

“All securities companies and fund companies shall further enhance internal control and risk management of securities lending, protect the rights and interests of investors, and ensure the sound development of this business.”

The plan will significantly boost securities lending activity in the country, which has lagged despite being introduced five years ago.

A number of Chinese brokers, such as GF Securities and China Galaxy Securities, have launched a securities lending business off the back of an IPO.