China to Ban Restricted Stock Lending Starting Tomorrow

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Chinese securities authorities announced on the 28th that they will completely ban the lending of restricted stocks for a certain period starting from the 29th.

The China Securities Regulatory Commission (CSRC) stated this through its WeChat account on the same day, explaining that the move "emphasizes fairness and rationality and will reduce the efficiency of stock lending."

The CSRC said, "It will limit institutional advantages in the use of information and tools, give all types of investors more time to digest market information, and create a fairer market order."

It added that this measure is "to implement an investor-centered regulatory concept and strengthen supervision over the lending of restricted stocks," and vowed to crack down firmly on illegal trading.

The CSRC also announced that from March 18, it will limit the efficiency of some stock lending in the stock refinancing market.

Stock lending services involve investors who hold stocks lending them out and receiving lending fees; the lent stocks are used for short selling or institutional volume.

Foreign media analyzed that restricted stocks are often provided to company employees or investors with certain trading limits but can be lent to others for trading purposes such as short selling, which can put pressure on the market when the stock market is in a prolonged slump.

The Chinese stock market fell 13% last year, and since the beginning of the new year, the decline has widened due to foreign selling pressure, a deepening real estate crisis, and an unstable economic recovery.

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