China’s securities regulator (CSRC) said that it will fully suspend the lending of restricted shares in policymakers’ latest attempt to stabilize the country’s stock markets following recent sharp falls.
Restricted shares are often offered to company employees or investors with certain limits on their sale, but they can be loaned to others for trading purposes, such as short-selling, which can add pressure on markets during a prolonged slump.
The move will “highlight fairness and reasonableness, reduce the efficiency of securities lending, and restrict the advantages of institutions in the use of information and tools, giving all types of investors more time to digest market information and creating a fairer market order”, the China Securities Regulatory Commission (CSRC) said a statement published on its official WeChat account, as cited by the Business Times.
The CSRC added that the move would “resolutely” crack down on illegal activities that use securities lending to reduce holdings and cash out. The regulator also said it will limit the efficiency of some securities lending in the securities refinancing market from March 18.