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CHINA STOCKS
MNI (London) - The CSRC effectively confirms earlier BBG source reports noting that it will continue to strengthen the supervision of OTC derivative business including Direct Market Access schemes and restrict quantitative trading activity.
- Direct Market Access schemes received some of the blame re: the recent equity market rout.
- The CSRC stressed that it will severely crackdown on illegal trading activity to maintain market order, along with guiding the securities industry to control its overall size and leverage.
- China margin use has recovered from the pre LNY low but still sits ~10% below the recent peak.
- Mainland China equity benchmarks sold off on the initial BBG story, despite the report suggesting that any leverage reduction will be gradual.
- The announcement extends the recent run of tighter regulation as the new head of the CSRC looks to stabilise Chinese equity markets.
Fig. 1: China Margin Balance (CNY 00mn)
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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