China's Government Continues to Cut Risks in Financial System

Forex News

The Chinese government continues to reduce risk in the country's financial system. According to some sources, the Securities Association of China (SAC) has asked brokerages not to provide finance based on over-the-counter (OTC) stock pledges. The SAC said in a notice dated May 30 that brokerages, their subsidiaries and any asset plans they are managing must not provide finance using OTC stock as collateral.

The SAC prohibits brokerages from providing third-party intermediary services such as market making and other services for banks and trust companies to pledge listed-company shares. Exceptions to the rule include any existing OTC equity pledge repurchase operations.