Enhancing Market Activity with New Trading Options

On February 10, 2023, the Beijing Stock Exchange (BSE) took a significant step toward invigorating its financial landscape by launching securities lending and margin trading services. This move is part of a broader strategy to enhance market liquidity and improve price discovery in the secondary market. The initiative enables select securities services firms under the China Beijing Equity Exchange (CBEX) group to facilitate these trading activities, which must be reported back to the CBEX.

The introduction of these services focuses primarily on stocks listed in the CBSE 50 Index and those meeting defined criteria. Specifically, eligible securities must have been listed for at least three months, demonstrate an average daily turnover of CNY 3 million (approximately US$0.44 million), and possess a minimum total market capitalization of CNY 1 billion. To mitigate confusion and enhance transparency, the BSE plans to publicly share a comprehensive list of these eligible securities on its official website.

Supporting Small and Mid-Sized Enterprises

This initiative is more than just a tweak in trading options; it aligns with the regulatory efforts initiated by the China Securities Regulatory Commission (CSRC) to broaden trading tools and facilitate capital-raising channels for the nation's small and mid-sized enterprises (SMEs). By expanding the scope of trading mechanisms, the CSRC aims to support market dynamism and ensure that enterprises have diverse avenues for financial growth.

The China Beijing Equity Exchange, operating with the approval of the Beijing Municipal People’s Government, places a strong emphasis on commodities, resource stocks, and public trading access for state-owned enterprises (SOEs). This new trading rollout complements these focal areas by adding layers of flexibility and opportunity for investors and corporations alike.

By February 2023, the BSE had attracted 169 listed companies, with their combined market value surpassing CNY 240 billion ($35.35 billion). The addition of securities lending and margin trading not only marks a pivotal progression in the CBEX market system but also tackles ongoing liquidity challenges, particularly within the SME sector. Investors can anticipate a more vibrant exchange with increased trading activities, ultimately steering Chinese markets toward a more dynamic future.