China to Cut Securities Firms' Reserve Requirement Ratio... 5-7 Trillion Won Expected to Enter Market

China has decided to lower the reserve requirement ratio for securities firms from the current 16% to around 13% starting this October, according to reports by the state-run Xinhua News Agency on the 5th.

According to the report, China Securities Depository and Clearing Corporation Limited (CSDC) recently stated, "In line with the reform of the commodity delivery settlement method and to improve the efficiency of market fund usage and the management level of settlement reserves, we have decided to lower the minimum payment ratio of settlement reserves." Settlement reserves refer to the securities trading and non-trading funds that securities firms are required to deposit in fund transaction accounts according to regulations.

Xinhua News Agency noted that since settlement reserves are equivalent to the reserve requirements of financial institutions, this decision can be understood as a reduction in the reserve requirements for securities firms. CSDC has lowered the settlement reserve ratio several times since 2019. The original settlement reserve ratio of 20% was reduced by 2 percentage points each in 2019 and 2022, resulting in the current 16%.

Industry experts expect that this reduction in the CSDC's settlement reserve ratio will release 30 to 40 billion yuan (approximately 5.5 to 7.3 trillion won) into the stock market.

This content was produced with the assistance of AI translation services.