Date
18 January 2017
In lifting the ban on brokerages holding net selling positions in trading for their own accounts, the CSRC is displaying its confidence that the stock market has returned to stability. Photo: Reuters
In lifting the ban on brokerages holding net selling positions in trading for their own accounts, the CSRC is displaying its confidence that the stock market has returned to stability. Photo: Reuters

China lifts brokerage rule in sign of confidence in market

In a sign of growing confidence China’s stock markets are stabilizing, the securities regulator has lifted a requirement that, in trading for their own accounts, brokerages buy more shares each day than they sell.

But China’s crackdown on financial markets in the wake of a stock slump in the summer continues as anti-corruption investigators opened probes into two of China’s largest brokerages and punished four insurance executives, Reuters reported.

After a summer rout wiped around 40 percent off mainland stock markets, the benchmark Shanghai Composite Index has recovered about 20 percent from its late August low.

That helped explain why the China Securities Regulatory Commission (CSRC) felt confident enough to lift the ban on brokerages from holding net selling positions in proprietary trading.

“In some ways it’s a positive factor – it shows that the CSRC has concluded that the market has basically returned to normal,” Du Changchun, an analyst at Northeast Securities in Shanghai, was quoted as saying.

The lifting of the ban, imposed in July, provides an opportunity to sell off some loss-making positions, but Du suggested there would be no rush to sell given the market was rising.

On Tuesday, the official Xinhua news agency cited a government paper saying investigators in Shanghai had started a probe into Guotai Junan Securities Co. Ltd. and Haitong Securities Co. Ltd.

The Central Commission for Discipline Inspection said four executives at state-owned People’s Insurance Co. (Group) of China Ltd. (01339.HK), one of the country’s largest insurers, had been punished for a wide range of offenses, including using trade union money to fund shopping sprees.

In further news to rattle the nerves of executives working in financial markets, the Asset Management Association of China (AMAC) said it had failed to contact 12 domestic hedge fund firms.

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