Shanghai Securities News (via MNI, quoting “sources familiar with matter”):

  • Regulators may limit brokerages’ borrowing in the interbank market
  • Brokerages have been securitizing income from lending to stock investors for margin trading and selling these securitized products in the interbank market to raise more cash and boost leverage ratios. But sources said regulators may require banks to classify these securitized products as shadow banking where there are no clear requirements. Many banks put these products on their balance sheets as standard-investment products.
  • Brokerages’ margin trading is growing fast … is an important driver of recent stock-price increases
  • Current outstanding money lent to stock investors under margin trading was CNY900 billion compared with CNY400 billion three months ago

Shaky times for Chinese stockmarkets, this from yesterday: Shanghai composite index closes down 5.4% at 2856.27 biggest one day % fall since Aug 2009