The FSC has announced measures including lowering the daily SBL (Securities-Based Lending) short selling limit and relaxing the scope of collaterals to cover the margin deficiency
Lowering the daily SBL short selling limit: For a three-month period beginning from 19 March 2020, the FSC has reduced the cap on total SBL short sale volumes during trading sessions. Existing regulations limit the volume of SBL short sale trading orders to "30% of the average trading volume in any given security over the preceding 30 trading days," but this cap has been lowered to 10%. However, SBL short selling due to hedging needs is exempted from the preceding regulation (e.g. securities dealers engaging in the business of issuing put warrants, over-the-counter trading of structured instruments or equity derivatives, and serving as the beneficiary certificate liquidity provider, or the futures dealers engaging in the market making business of equity options and equity futures, etc.)
Relaxing the scope of collateral to cover margin deficiency:
For a three-month period beginning from 19 March 2020, investors that have obtained the creditor''s consent are allowed to meet a margin call (for either a margin purchase or a short sale) by posting any collateral that has market liquidity and can be objectively and reasonably valued. The FSC has called upon securities firms and other creditors to reasonably evaluate investors'' margin purchase and short sale activity, and to handle their situations in a proper and legally compliant manner.
Visitor： 567 Update： 2020-05-05