Since the new policy of refinancing on January 29, the scale of securities lending and borrowing in the market stock has decreased significantly.
According to data from China Securities Finance, on April 11, the market-wide securities lending and selling volume was 682 million yuan, the lowest point since 2021. On April 10, there was still 1.755 billion yuan in securities lending and selling in the whole market. That is, in one day, the amount of securities lending and selling fell sharply.
So, what is the significance of the sharp decline in the balance of securities borrowing and lending? What do industry experts think about this?
Since the beginning of this year, the balance of securities lending and borrowing has fallen by about 40%.
According to the data of Oriental Fortune Choice financial terminal, as of April 10, 2024, the balance of margin financing and securities lending in Shanghai, Shenzhen and Beijing was 1,544.1 billion yuan, of which the financing balance was 1,501.1 billion yuan, and on April 10, 64.88 billion yuan of financing purchases occurred in A-shares, and 68.07 billion yuan of financing was repaid. In terms of margin balance, the closing price on April 10 was 43.02 billion yuan, while at the beginning of this year, this figure was 71.60 billion yuan. In other words, the balance of securities lending and borrowing has decreased by about 39.92% since the beginning of this year.
From the second half of last year to the beginning of this year, the A-share market continued to fluctuate and decline, and the risks of the two financial services have attracted much attention from the market. At the beginning of this year, the A-share market experienced a deep adjustment. Securities lending business was identified as one of the important reasons for the decline of A-shares. To this end, the regulator has adjusted the rules of the two financial services for many times, and resolutely cracked down on illegal activities such as detouring to reduce holdings and cashing out in the name of securities lending and borrowing to ensure the smooth operation of the two financial services.
In October last year, the China Securities Regulatory Commission (CSRC) issued new regulations on the two financial institutions, removing the restrictions on the lending of securities by senior executives and core employees of listed companies through special asset management plans established by participating in strategic placements, and at the same time appropriately restricting the lending methods and proportions of other strategic investors in the early stage of listing. After the new regulations, the balance of securities lending and borrowing and lending of strategic investors both declined.
On January 28, the China Securities Regulatory Commission (CSRC) made another adjustment to the business rules of the two financial institutions, including the complete suspension of the lending of restricted shares and securities lending, and the second adjustment of the market-based declaration of refinancing securities from real-time availability to next-day availability to limit the efficiency of securities lending and lending. Among them, since March 18, the refinancing business has officially changed from "T+0" to "T+1".
On February 5, the China Securities Regulatory Commission (CSRC) once again stated its position on the issue of financial integration, stating that it would guide securities companies to provide customer service in an all-round way, and maintain the flexibility of the liquidation line by extending the time of insurance call and dynamically lowering the liquidation line, so as to reduce the risk of forced liquidation and market pressure.
On February 6, the China Securities Regulatory Commission (CSRC) put forward three strong regulatory measures for securities lending business: first, suspend the scale of new refinancing securities, with the balance of existing refinancing securities as the upper limit, suspend the scale of refinancing securities of new securities companies in accordance with the law, and gradually close the stock; Third, we will continue to strengthen supervision and law enforcement, crack down on illegal activities such as improper arbitrage through the use of securities lending and borrowing transactions, and ensure the smooth operation of securities lending and borrowing business.
During this period, in order to strengthen business management and prevent the risks of the two financial businesses, a number of securities companies continued to "patch" the two financial transactions by revising business contracts, adjusting trading rules, and urgently lowering the liquidation line.
Industry experts: or prepare for the expiration of securities lending
The original intention of the refinancing securities business is to make up for the lack of market staff, and the refinancing securities lending of ETF funds can increase the income of the fund to a certain extent. After the new policy of refinancing, fund companies and securities firms immediately responded and made adjustments. First of all, more than 10 public offerings, including E Fund, China Asset Management and China Southern Fund, successively stated that they would suspend the scale of new refinancing securities lending. On March 16, brokerages also conducted a system test on T+1 and a notice on refinancing the loan agreement.
Gu Hansheng, the founder of Wuyu Information, who has been observing the two financial businesses for a long time, said that this wave of suspension is mainly to reduce the impact on the market in the future and ensure the stability of the market. Under the adjustment of various policies, the scale of refinancing securities has declined around the Spring Festival, but due to the existence of demand for securities lending, some capable securities firms have taken corresponding measures to hoard securities, and now it is in the process of "gradual liquidation of stocks". The original intention of the brokerage to suspend securities lending does not rule out the possibility of preparing for the maturity of the securities source in 3 to 6 months.
"Due to the time limit of some of the previous bond sources, with a maximum period of 182 days, the first batch of bonds will roughly expire in July and August this year, in order to avoid the selling pressure at that time, now adopt more stable operating rules, in line with the laws of the market, reduce the impact on the market in the future, and ensure the stability of the market. Gu Hansheng said.
For the above point of view, some brokerages also expressed their approval. Some people in the industry said that under the premise of risk control, other small and medium-sized brokerages may refer to the measures of the head brokerages to optimize the structure of the bond pool and release the stock.
It can be seen that since the beginning of this year, the capital market ecology has been gradually optimized, especially since January, a series of policies in the capital market have been continuously introduced, with the National Standing Committee emphasizing efforts to stabilize the market and stabilizing confidence, the State-owned Assets Supervision and Administration Commission (SASAC) has comprehensively promoted the market value management of listed central enterprises, the China Securities Regulatory Commission has emphasized the construction of an investor-oriented capital market, the suspension of the lending of restricted shares in securities lending business, and the centralized release of the four policies on 3.15 has highlighted the "two strong and two strict" policy combinations, and the capital market ecology has been continuously optimized.
Securities lending business is an important area of this wave of ecological optimization, and the regulator also clearly requires securities firms to strengthen the management of customer trading behaviors, and strictly prohibit investors who use securities lending and borrowing to implement intraday rotation trading (disguised T+0 trading). In addition, the regulator has also stated that it will continue to strengthen regulatory law enforcement, crack down on illegal activities such as improper arbitrage through the use of securities lending transactions in accordance with the law, and ensure the smooth operation of securities lending and borrowing business.
The side has reduced the quantitative private equity scale of related strategies
The securities lending business is in turmoil, and the market is prone to turn its attention to quantitative private placement.
"The market is now worried that with the continuous decline in the scale of securities lending, the source of securities is already very tight, and it is not easy to borrow bonds, which will affect the operation of quantitative long-short strategy products. A market source said.
It is undeniable that with the decline in the scale of refinancing in the market and the decline in the efficiency of securities lending after T+1, the long-short strategy and DMA business will also be affected. The above-mentioned person pointed out that through the restriction of securities lending tools, the profits of DMA and other businesses continue to decline, and some institutions may consider taking the initiative to stop related businesses, which also achieves the goal of reducing the scale of stock business.
A market participant said that if you still want to continue to do long and short strategy business and DMA business in the form of T+0, you may turn to overseas in the future, and the trading target is still A shares. Through the registration and establishment of private equity funds overseas, the development of overseas securities companies has been in the planning of some institutions.
According to the above-mentioned person, the overseas business can generally be divided into two situations: one is to assume that the product is in the country, the long strategy is in the country, hedging overseas, the interest rate of overseas borrowing is higher, and the cost is relatively high, and more importantly, the domestic private placement and overseas brokerage borrowing is a violation, under the current Hong Kong Stock Connect penetrating management, the transaction amount is easy to be found, in addition, cross-border income swaps have long been stipulated that no new scale is allowed, so this road does not work; 。
The market participant also reminded investors that there are also long-short strategy products overseas, but because there is no limit on the rise and fall of overseas markets, the risk is greater.
A number of quantitative private placements also emphasized that while strengthening the supervision of securities lending business to ensure the smooth operation of securities lending business, the market should also affirm the positive significance of securities lending and borrowing in improving the efficiency of price discovery.