SSE loosens up on ETF margin trading
31 May 2013
By Hui Ching-hoo
Shanghai Stock Exchange (SSE) is set to increase the ratio for margin trading and short selling for qualified ETFs from 25% to 75% of the trading volume of the index funds.
The bourse announced on May 29 that the initiative is intended to accommodate market demand and appropriately control market risks. Under the new system, when the amount of margin trading and short selling exceeds 75% of the turnover of the ETFs, the margin financing will be suspended until the ratio returns back to below 70%.
ETF margin trading and short selling was first introduced in mid-2011 in order to promote a rise in the turnover of ETF products. Currently, seven ETFs listed on the SSE are qualified for margin trading.
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