On the surface, the mechanisms of margin financing and stock index futures are similar, both of which introduce short-selling mechanism in the stock market and can be leveraged. It can also realize the characteristics of T+0 operation, but they are essentially different, and will not form a big conflict and seize the market with each other.

The difference between margin financing and stock index futures

First of all, they have different goals. Margin trading and refinancing use loans and leverage to buy and sell stocks, thus making it possible for two-way benefits.

Second, there are obvious differences in the design of trading system, which are embodied in the margin ratio (leverage ratio), handling fee, trading process and so on.

Third, the scale of transactions varies greatly. The application fields of margin financing and stock index derivatives are different from the target investors, which directly leads to the different transaction scales of the two.

Investors are willing to participate in margin financing and securities lending in order to vote on the valuation of a single stock. If investors think that stocks are undervalued, they will buy them through financing, and if they think that stocks are overvalued, they will sell them through securities lending, thus forming a more flexible portfolio. There are no obvious restrictions on the trading and holding of stock index derivatives.

Margin trading has created better arbitrage conditions.

Margin trading has created better conditions for arbitrage trading in the whole securities and futures market. If stock index futures exist, the market is now stepping up research on the arbitrage between stock index futures and spot market. If there is no margin trading business, we mean normal arbitrage, that is, we buy stocks and make a stock portfolio, and its portfolio is related to some indexes.

There is also reverse arbitrage. If the futures market continues to be depressed, and the spot index futures such as the Shanghai and Shenzhen 300 Index are lower than the spot of the Shanghai and Shenzhen 300 Index for a long time, then there is no way to short the heavyweights of the Shanghai and Shenzhen 300 Index and buy stock index futures to profit from it. This can't be done, but if the margin trading business is launched, it can become a reality to some extent.

The two can promote each other and complement each other.

The existence of margin financing and securities lending can better promote the function of stock index futures to avoid risks, and the existence of stock index futures also provides a good tool to avoid operational risks for brokers who carry out margin financing and securities lending business. With margin financing and securities lending, stock index futures can play a better role and function.

If there is no securities lending business, it is impossible to sell stocks smoothly, and the reverse arbitrage of stock index futures will be limited to some extent. The establishment of securities lending mechanism will change the "one-sided market" pattern in which investors can only do more but not short, so that stock index futures traders can easily operate in both directions after predicting the rising or falling trend of the market, which can help investors better avoid market risks. Therefore, securities lending can promote the function of stock index futures.