Margin balance is divided into margin balance and margin balance, also known as the balance between them. Financing balance refers to the difference between the amount of stock bought by market financing and the amount repaid by financing. The balance of securities lending refers to the difference between the securities sold in the market and the securities bought and repaid.
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Margin trading refers to the securities trading activities in which customers provide collateral, securities companies lend funds to them to buy listed securities or sell listed securities, and customers repay the borrowed funds or securities, interest and expenses within the agreed time limit.
The main differences between margin financing and stock pledge financing are as follows:
First, the theme is different.
As the name implies, margin financing and securities lending can be used for both financing and securities lending. Buying stocks with financing funds will enhance the strength of many parties, and margin financing and securities lending will enhance the strength of the empty side. Therefore, margin financing and securities lending is a double-edged sword, which can be long or short. Stock pledge financing can only obtain funds, not short.
Second, the purpose of financing is different.
In margin financing and securities lending, the funds usually must be used to buy listed securities, which enhances the liquidity of the securities market and accelerates the value discovery function of the securities market under certain conditions.
Stock pledge financing is different, and the funds obtained cannot be used to purchase listed securities.
Third, the collateral is different.
Margin financing and stock pledge financing are both credit to the comprehensive party, so they all need collateral.
In margin financing and securities lending, the collateral can be stock or cash.
Stock pledge financing is different, it mainly aims at obtaining cash, so it is impossible to use cash as collateral. Its main collateral is securities, such as stocks of listed companies, securities investment funds and corporate bonds.
Fourth, the main body of capital financing is different.
Margin trading has adopted different modes of operation in different countries.
Verb (abbreviation for verb) Leverage ratio is different from risk control.
Generally speaking, margin financing is more controllable than stock pledge financing. .
Sixth, product attributes are different.
Margin trading is a standardized product, and there are clear and specific arrangements or provisions on trading rules and contract details. Stock pledge financing is not a standardized product, but essentially reflects a civil contractual relationship, and the specific financing details are agreed by both parties.
Seven, the impact on institutional investors is different.
As far as individual investors are concerned, if the purpose of financing is to buy stocks, margin financing and stock pledge financing can achieve the same effect, but the impact on institutional investors is different.