SSE Moderately Reduces Margin Ratio to Promote Effective Functioning of Securities Margin Trading Business
On August 27, 2023, the Shanghai Stock Exchange (SSE), with approval from the China Securities Regulatory Commission, revised Article 39 of the Implementation Rules of Shanghai Stock Exchange on Securities Margin Trading (Revised in 2023), reducing the financing margin ratio from 100% to 80%. This adjustment will be officially implemented after the market close on September 8, 2023.
The financing margin ratio refers to the ratio of the margin deposited by investors to the amount of the margin trading. For example, when the financing margin ratio is 100%, investors can borrow up to 1 million yuan from the securities company to purchase securities with a margin of 1 million yuan. When the financing margin ratio is reduced to 80%, investors can borrow up to 1.25 million yuan from the securities company to purchase securities with a margin of 1 million yuan. The margin ratio for securities borrowing remains unchanged at no less than 50%.
It should be noted that the adjusted margin ratio stated here not only applies to new financing contracts. Securities companies can, according to their agreements with investors, also lower the margin ratio of ongoing financing contracts that have not been settled before the implementation of this revision. Meanwhile, securities companies can independently determine the specific margin ratio according to investors' and their own risk tolerance under the premise of meeting regulatory requirements. Investors are advised to pay attention to the risks associated with margin trading and securities borrowing, and establish awareness of rational investment.
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