Shanghai, Shenzhen exchanges raise margin financing requirement ratio

[SHANGHAI] Shanghai and Shenzhen Stock Exchanges will raise the base margin financing ratio to 100 per cent from the 50 per cent effective Nov 23, the two stock exchanges said on their websites on Friday.

The change will require investors to keep 100 per cent of the value of their margin loans on hand in the form of collateral.

The move will reduce the risk implicit in trading using debt, but may also impact market liquidity.

Chinese regulators have been moving steadily to reduce the riskier forms of trading after a sharp stock market crash in the summer was aggravated by the presence of heavy leverage.

REUTERS