In accordance with the decision of the State Council and the approval of China Securities Regulatory Commission (CSRC), China Securities Finance Co., Ltd. (CSF) was incorporated on October 28, 2011 as a securities-related financial institution specialized in operating margin financing loans business. CSF now has a registered capital of RMB12 billion. According to the duties delegated by CSRC, CSF plays its role to provide securities companies with margin financing loans, lending out funds and securities to securities companies when their funds or securities are insufficient to facilitate their customers’ margin transactions (margin trading and short selling). In the meantime, CSF monitors the operation of China’s margin transactions and compiles statistics for the same. It also performs other duties as determined by CSRC.

 

Since the margin transaction business of the securities companies was inaugurated in China on March 31, 2010, the business has been growing at a striding pace. As of end 2012, 72 securities companies in China had been operating the business. The accumulative turnover of the business reached RMB2.36 trillion, and the balance approached RMB100 billion, making margin transactions of securities an important margin-based transaction form in China’s capital market. It plays an important role to complete the bidirectional transaction mechanism of the securities market, promote the innovation and development of the securities companies, increase the sources of funds and securities for the investors, and diversify the methods of asset management.

 

The Margin Financing Loan business of CSF includes the Margin Funds Loan business and the Margin Securities Loan business. CSF acts as the intermediary agent in the borrowing and lending of funds and securities for securities companies, fund managers, institutional shareholders of listed companies, and other market participants. The business is an important supporting mechanism for the margin transactions business of securities companies, being aimed for the establishment of an efficient, fair, honest and integrated margin transactions market and a complete risk monitoring system. In August 2012 and February 2013, CSF consecutively launched the pilot operation of margin funds loan business and margin securities loan business. As of March 2013, the number of the securities companies that participated in the pilot operation of margin financing loan business increased from the starting 11 to 52. The accumulative turnover of margin funds loans lent out to the companies reached RMB107.96 billion. The outstanding balance of margin funds loans was RMB34.88 billion, and the outstanding balance of margin securities loans was RMB144 million. In view of the increasing demand from the market for margin financing loans, CSF has been actively diversifying its sources of funds and securities. Through capital expansion, issuance of short-term financing bills and subprime bonds, and other methods, CSF has been continuously expanding its financing channels. By doing so, CSF serves the margin transactions business of the securities companies, diversifies the sources of funds for the investors on securities investment, and completes the functions of margin transactions, primarily embodying its role in serving the financial industry and the capital market.

 

CSF will thoroughly implement the decision of the Eighteenth Party Congress. Under the correct leadership of CSRC, it will continue to carry out financial innovation, and improve risk monitoring and prevention. For the overall interests in developing and completing the transaction mechanism of the capital market, and promoting the healthy and stable development of the same, CSF will honor its responsibilities of providing quality margin financing loan services and preventing risks in margin transactions, making its due contribution to the deepening of reform in the financial system and the stable and healthy development of the capital market.