Fox Capital Partners Comments - CSRC Probes Margin Trading Violations

2024-04-02 06:25:58 Business

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Fox Capital Partners: China?s securities regulator has launched a probe into misuse of margin trading contracts.
Shenzhen, China-based broker-dealer, Fox Capital Partners says it applauds the China Securities Regulatory Commission (CSRC) probe into alleged malpractice among the country?s biggest brokerages involving misuse of derivatives to finance margin trading and circumvent short-selling rules.

Haitong Securities, Citic Securities and Guosen Securities are just three of the largest brokerages who recently announced they were under investigation as the regulators initial search for those it believes caused the huge selloff in the summer morphs into a broad-based cleanup of the securities industry.

?While we?re not completely convinced that short-selling played as much of role in the summer selloff, we do think that abuse of margin trading and subsequent attempts to circumvent the ban on its use frustrated the CSRC?s attempts to stabilize the markets,? said Gordon Li-Chao, chief economist at Fox Capital Partners.

Despite its broad agreement with the development, Fox Capital Partners expressed concerns that the regulator has provided very little information on what exactly the brokerages being probed had done wrong.

Some commentators believe anti-graft officials in Beijing are trying to create a culture of fear among the more powerful executives at the biggest brokerages so as to discourage wrongdoing but Li-Chao believes that is a secondary aim if one at all.

?We think it?s a major step in the right direction for ensuring transparency in the market. The fact that a clique of executives at the top of the largest firms has unfair advantage and influence does immense damage to the way the market is perceived by investors, many of whom lost significant sums in the rout,? he explained.

About Fox Capital Partners
Fox Capital Partners is a successful, independent investment management practice established in Shenzhen City, China and headquartered in Shenzhen. Our highly-qualified professionals advise on a wide array of wealth accrual, preservation and portfolio management solutions aimed at affluent individuals and families in Asia and elsewhere.