The China Securities Regulatory Commission (CSRC) issued a statement on Saturday outlining its plans to impose restrictions on securities lending businesses and enhance oversight to prevent improper regulatory arbitrage.
The CSRC’s statement highlighted several measures to fortify the management of securities lending and re-lending, including the imposition of higher margin requirements and limitations on the lending of shares by strategic investors and senior management in newly listed companies.
These rules come as a response to increasing concerns about short-selling activities in a sluggish stock market. There have also been demands to restrict securities lending by strategic shareholders in newly-listed firms.
An example that fueled these actions was the act of senior management and key employees of Shandong Golden Empire Precision Machinery Technology Co (603270.SS), who lent their shares to other investors for sale when the company debuted in Shanghai. This event sparked public discontent and led to a regulatory investigation into these activities.