China’s securities regulator has canceled a requirement that brokerages must have a net positive purchase position on daily proprietary trading, three sources with direct knowledge of the matter told Reuters on Tuesday.
The sources said the statement from the China Securities Regulatory Commission also requested that all branches of the regulator further strengthen risk management, although it highlighted that the equity market had slowly begun to stabilize.
The specific requirement that brokerages’ daily proprietary trading positions should be net positive was also promulgated in July, as part of a larger package of measures to support the market.
Essentially, brokerages can now go back to selling more shares than they purchase on any given day.
At the height of the equity panic in early July, 21 Chinese brokerages pledged to purchase at least 120 billion yuan ($18.79 billion) of shares in a bid to stabilise the country’s stock markets. The brokerages further pledged that they would not sell off those holdings as long as the Shanghai Composite Index is below 4,500 points.
After a rout in late summer that took mainland equity indices down around 40 percent, the Shanghai Composite Index is now up over 20 percent from its late August low.
As the equity markets have clawed back lost ground and showed signs of stabilizing, regulators announced on November 6 that initial public offerings – also halted in early July – would resume after November 20.
On Monday, ten Chinese firms applied for approval to raise over three billion yuan through mainland listings. ($1 = 6.3860 Chinese yuan renminbi) (Reporting by Xiaochong Zhang, Nathaniel Taplin and the Shanghai Newsroom; Editing by Shri Navaratnam)
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