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How does the stock market margin trading business work? How can one open an account to get a low fee rate?

2024-08-20

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The margin trading business refers to the operation in which investors borrow funds from securities companies to purchase securities or borrow securities to sell, and use securities or funds as collateral for the transaction.

For margin trading, you must first open a margin account. To open a margin account at a securities company, you need to provide relevant identity documents and financial collateral, and sign a margin agreement and risk disclosure statement.

After opening a margin trading account, investors can apply for margin trading or short selling from securities companies. When applying, investors need to provide a certain amount of funds or securities as margin. The securities company will give a specific margin quota and short selling amount based on the margin ratio.

Repayment of financing: Within the agreed period, investors need to repay the financing principal and interest. This can be done directly or by selling securities, that is, selling securities in the margin trading account to repay the debt.

Return securities and pay interest: Within the agreed period, investors need to buy back the same number and type of securities and return them to the securities company, and pay the corresponding securities lending fees. The return method can be cash return (direct return of borrowed securities) or purchase return (return by buying the same securities).