What is margin trading?
It refers to the business activities of securities companies lending funds to investors for them to buy securities, or lending securities for them to sell.
The transaction activity in which investors borrow funds from securities companies to buy securities and borrow securities to sell is called margin trading, also known as credit trading.
\x0d\\x0d\ Margin financing and securities lending transactions are divided into two categories: margin trading and securities lending transactions.
When an investor borrows funds from a securities company to buy securities, it is a financing transaction; when an investor borrows funds from a securities company to sell securities, it is a securities lending transaction.
\x0d\\x0d\ Financing can enlarge the scale of your operation. For example, when you are optimistic about a certain stock and want to intervene in a large way but don't have much money, you can borrow money from a brokerage firm to buy the stock. When the stock rises to the target price, you can sell
Sell ??out stocks to pay off borrowings, thus magnifying your gains.
Securities lending creates conditions for you to make money by short selling. When you are bearish on a certain stock, you can borrow the stock from a brokerage firm, then sell it. After it falls, you can buy the stock and return it to the brokerage firm to get the difference.
\x0d\\x0d\So, can all investors participate in margin trading?
no!
\x0d\\x0d\Article 12 of the "Measures for the Pilot Administration of Margin and Securities Lending Business of Securities Companies" clearly stipulates that if you have been engaged in securities trading in a securities company for less than half a year, have insufficient experience in securities investment, lack the risk-taking ability, or have a record of major breach of contract,
Securities companies cannot and will not provide you with financing or securities lending.
In other words, new investors who have been trading in stocks for less than half a year will be disqualified first, and investors who have no risk tolerance are also not eligible.
Because brokers are also worried about risks, they may have minimum threshold requirements for customers' capital when formulating terms. In this way, investors with too small capital may not be able to participate in margin financing and securities lending.
\x0d\\x0d\How to play: borrow money and repay shares, borrow shares and repay shares\x0d\\x0d\Article 21 of the "Administrative Measures": If a customer purchases securities with financing, he or she shall repay the loan by selling securities or directly.
way to repay the funds borrowed from securities companies.
If a customer borrows and sells securities, he or she shall repay the securities borrowed from the securities company by buying or repaying the securities or directly repaying the securities.
\x0d\\x0d\Borrow money and pay back money, borrow stocks and pay back stocks.
This means that when the securities bought by margin financing fall, you need to add additional funds to repay the loan. When the stocks sold by margin financing rise, you also need to increase funds to buy the same number of stocks to close the position.
\x0d\\x0d\Who will be the collateral for margin financing and securities lending?
\x0d\\x0d\ Mainly includes three categories: cash, SSE-listed trading funds, bonds, and stocks.
Among them, a series of restrictive conditions are also listed for stock collateral, including listing and trading for three months; the circulating share capital is not less than 200 million shares, the circulating market value is not less than 1 billion yuan; the average daily turnover rate during the sampling period is not less than
Less than 3%.
The average daily volatility does not exceed 3%, and the fluctuation range does not exceed 60%; the number of shareholders holding more than 1,000 shares exceeds 5,000; the total shareholding ratio of the top 50 shareholders of circulating shares does not exceed 60% of the circulating shares; the stock issuance company has completed
Share split reform; stocks not subject to special treatment (non-ST shares), etc.
CSI 300 stocks, including 50 Shanghai Stock Exchange stocks, will be collateral that brokers are willing to accept.
\x0d\\x0d\Which brokerage firm is expected to be the first to pilot it?
\x0d\\x0d\The "Administrative Measures" provide 7 conditions that should be met by applying for pilot securities companies, among which, "has been evaluated as an innovative pilot securities company by the Securities Association of China" and "the net capital in the past six months has been
"More than 1.2 billion yuan" are two tough conditions.
Among the existing 17 innovative securities firms, the net capital of Bank of China International, Shanghai Securities, Guodu Securities and Donghai Securities does not meet the above requirements.
\x0d\\x0d\ Since net capital levels must be given priority under the same conditions, securities firms with relatively low net capital levels such as China Merchants Securities, Ping An Securities, Changjiang Securities, Guoyuan Securities, and Orient Securities have basically no possibility of becoming the first batch of pilot projects.
.
\x0d\\x0d\ Among the remaining eight securities firms, from the perspective of net capital, CITIC Securities, Haitong Securities, Huatai Securities and Guotai Junan have obvious advantages. It is basically certain that CITIC Securities will enter the pilot; from the perspective of brokerage business volume
, Guotai Junan, Haitong Securities, Guosen Securities and GF Securities ranked among the top four last year. Guotai Junan also has strong competitiveness in being shortlisted; from the perspective of the quality of securities companies, CICC is naturally higher, and its net capital ratio has been higher than 90% for a long time.
, and the institutional client resources are quite strong, I believe we can occupy a seat.
\x0d\\x0d\Don’t overdo it!
\x0d\\x0d\When you apply for margin trading, if the stock price trend is opposite to your expectation, you will face huge risks. For example, the stock you bought does not rise but falls instead, and the stock you sold through securities lending will
The stock does not fall but rises. When the loss on your account approaches the margin bottom line, you will be required to make a margin call.
At the same time, since stock price fluctuations are not one-way, in order to reduce risks, it is best not to operate with a full position after margin trading.
Otherwise, the position will be closed due to insufficient funds.
When the losses on your account reach the margin bottom line, the brokerage will liquidate your securities and you will be completely whitewashed.
\x0d\\x0d\ Calculate the cost account: The "Measures" stipulate that the financing interest rate shall not be lower than the benchmark loan interest rate of financial institutions for the same period specified by the People's Bank of China.
This means that interest rates will be one of the important costs of your margin trading, which will increase your holding costs. If your stocks do not rise or fall, you will also lose money.