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Less worries about stock trading

In response to the claim that "the data on the transfer and financing channel are all virtual and there is actually no upper limit on the amount of short selling", China Securities Finance issued a solemn statement on August 5, saying that the relevant statement is a rumor.

In order to solve the problem of insufficient securities sources in securities lending business of securities companies, the securities lending system was launched in 2013. Lenders lend securities to China Securities Finance, securities companies borrow securities from China Securities Finance, and then provide them to investors for short selling. China Securities Journal reporters learned from relevant persons of China Securities Finance that there are real stock transfer records in each link of securities lending, and the whole process can be traced back. The website of China Securities Finance publishes data such as the trading volume, rate, balance and balance of securities lending on each trading day. This information is based on objective records of real transactions. It can be said that the securities lending data is based on real transaction data agreed upon by lenders and borrowers. The statement that "the securities lending data is all virtual" is seriously inconsistent with the facts.

In response to the statement that "there is actually no upper limit on the amount of short selling", relevant personnel from China Securities Finance said that this is a serious distortion of the facts. There is a clear upper limit on the amount of short selling for each stock. my country's current business framework for short selling strictly prohibits "naked short selling" and prohibits investors from selling stocks when they do not have the stocks. When investors short sell stocks, the number of shares held by the lender must decrease. It is impossible to short sell non-existent stocks. The existing regulations clearly stipulate that the balance of securities lent out through short selling shall not exceed 10% of the listed tradable market value of the securities.

According to the rules, all securities lending transactions are securities-for-sales transactions, and there has never been a cash settlement. Although the securities lending rules allow cash settlement, it is mainly applicable to extreme situations such as long-term suspension or delisting of stocks. Over the past decade, securities lending has accumulated millions of transactions, all of which were repaid in the form of stocks, and there has never been a cash settlement.

After the introduction of the securities lending and securities lending system, it has played a positive role in calming down irrational market fluctuations, promoting long-short balance and price discovery, and attracting medium- and long-term funds to enter the market. Since the second half of last year, the China Securities Regulatory Commission has taken a series of measures to strengthen supervision and counter-cyclical regulation based on market conditions and investors' concerns about securities lending and securities lending business, and approved China Securities Finance to suspend securities lending business in accordance with the law on July 10 this year. Statistics show that as of August 2, 2024, the balance of securities lending has dropped to 17.1 billion yuan, a decrease of more than 40% from before the new regulations on July 10; the balance of securities lending has dropped to 21.2 billion yuan, a decrease of more than 30% from before the new regulations, and the scale of securities lending and securities lending has steadily declined.

China Securities Finance said that it strongly condemns those who create rumors and maliciously spread them on the Internet. For those who cause adverse effects, it will initiate legal proceedings and seriously investigate the legal responsibilities of the relevant people.

Source: China Securities

Statement: All information content of Databao does not constitute investment advice. The stock market is risky and investment should be cautious.

Editor: He Yu

Proofreading: Yang Lilin

Data treasure