The China Securities Regulatory Commission comprehensively suspended the lending of restricted stocks and restricted the efficiency of securities lending! What impact will it have on the market?

　　Lending of restricted shares has been completely suspended.

　　On January 28, the China Securities Regulatory Commission stated that in order to implement the investor-oriented regulatory concept and strengthen the supervision of restricted stock lending, the China Securities Regulatory Commission has further optimized the securities lending mechanism in two aspects after full evaluation and evaluation.

　　Specifically, the first is to completely suspend the lending of restricted shares, which will be implemented from January 29. The second is to adjust the market-based declaration of securities refinancing from real-time availability to next-day availability, thereby limiting the efficiency of securities lending. Due to factors such as system adjustments, it will be implemented from March 18.

　　Subsequently, the Shanghai and Shenzhen Stock Exchanges simultaneously issued the "Notice on Suspension of Lending of Allotted Stocks by Strategic Investors within the Committed Holding Period." China Securities Finance Co., Ltd. (hereinafter referred to as "CSI Finance") issued a notice on suspending the real-time availability of borrowed securities through refinancing.

　　Taken together, market participants believe that there are three core aspects to this system optimization: first, to strengthen the supervision of securities lending of restricted stocks; second, to reduce the efficiency of securities lending and create a fairer market order; and third, to reflect the needs of investors, especially small and medium-sized enterprises. Protection of investors’ legitimate rights and interests.

　　"This reform of the securities lending business is of positive significance for improving the long-short structure of the market, restraining improper arbitrage behavior, and improving market fairness. As the accumulated quantitative changes in policy reforms promote qualitative changes, the capital market is expected to stabilize and pick up." CITIC Securities said.

　　Ping An Securities further pointed out that the recent joint efforts of regulatory agencies such as the China Securities Regulatory Commission, frequent regulatory statements to release stable expectations signals to the market, and policy combinations such as optimization of securities lending are conducive to the restoration of confidence in the equity market.

Further stabilize market confidence

　　The China Securities Regulatory Commission stated that in October 2023, the China Securities Regulatory Commission canceled the lending of special asset management plans established by listed company executives and core employees by participating in strategic placements, and restricted the lending methods and proportions of other strategic investors in the early stage of listing. Since the implementation of the new regulations , the lending balance of strategic investors dropped by nearly 40%, achieving good results.

　　On the basis of summarizing the previous experience in optimizing the arrangements for the securities lending mechanism, and following the idea of ​​“steady advancement and step-by-step implementation”, the China Securities Regulatory Commission’s optimization of the securities lending mechanism mainly reflects the regulatory intentions in two aspects.

　　The first is to highlight fairness and reasonableness, reduce the efficiency of securities lending, restrict the advantages of institutions in the use of information and tools, give all types of investors more time to digest market information, and create a more equitable market order.

　　The second is to highlight strict supervision, restrict the lending of all restricted stocks in stages, further strengthen the supervision of securities lending of restricted stocks, and at the same time, resolutely crack down on illegal activities that use securities lending to reduce holdings and cash out.

　　"Supervision should optimize the securities lending mechanism in a timely manner, based on maintaining market fairness and being investor-oriented. A fairer system will help stabilize market confidence." Xu Yishan said.

　　Liu Xinqi, non-bank chief of Guotai Junan Securities, said in the report that optimizing the securities lending mechanism aims to implement the investor-oriented regulatory concept and will effectively protect the legitimate rights and interests of investors. Among them, after the securities refinancing agreement is changed from being sold in real time by securities lending investors to being available the next day, the lending information of the previous day will be disclosed through the exchange and the CSI Financial website, and it will be available for financing from the next day. bonds, giving all types of investors sufficient time to digest market information.

　　On January 28, CSI Financial issued a notice on suspending the real-time availability of borrowed securities for refinancing. In order to further optimize the securities lending system, the implementation of the "Refinancing Business Rules of China Securities Finance Co., Ltd. (Trial)" (revised in June 2023 )》Articles 38 and 39 involve relevant provisions on the real-time processing of agreed declarations for securities refinancing. Securities borrowed in the agreed declaration method on the same day will be adjusted from being available in real time to being available on the next trading day. The market making and borrowing business of the Science and Technology Innovation Board will be implemented in accordance with the above arrangements and will be effective from March 18, 2024.

　　"Following the previous adjustments to the margin ratio of the two banks and the restrictions on strategic investment lending by senior executives, this time the lending of restricted stocks is fully suspended and the efficiency of securities lending is moderately adjusted. This is an important step in actively and quickly implementing the 2024 system work conference of the National Council and the China Securities Regulatory Commission. It fully reflects the investor-oriented concept and the protection of the legitimate rights and interests of investors, especially small and medium-sized investors." Galaxy Securities said.

It will have limited impact on the performance of securities firms and is conducive to market recovery.

　　At the level of securities firms, analysts believe that further optimization of the securities lending mechanism will have limited impact on the performance of securities firms and will be beneficial to the long-term development of the securities industry.

　　"The decline in the balance of securities lending has a limited impact on the performance of securities companies. Assuming that the average interest spread of the securities lending business is 400bps, it is estimated that the net interest income from securities lending accounts for only about 0.8% of the revenue of the securities industry. At the same time, the China Securities Regulatory Commission has issued regulations on securities lending in October 2023. The system has been initially optimized. As of January 25, the market-wide securities lending balance was 70.5 billion yuan, a 19% decrease from before the implementation of the new regulations." Xu Yishan, chief financial analyst at Founder Securities, pointed out in the report that assuming the average profit of the securities lending business The difference is 400bps, and it is estimated that the net interest income from securities lending accounts for only about 0.8% of the securities industry’s revenue.

　　Xu Yishan said that the China Securities Regulatory Commission has made initial optimization of the securities lending system in October 2023, canceling the lending of special asset management plans established by listed company executives and core employees by participating in strategic placements, and restricting the lending of other strategic investors in the early stages of listing. Lending methods and proportions.

　　On October 14, 2023, the China Securities Regulatory Commission made targeted adjustments and optimizations to the system for securities lending and the lending of placement shares to strategic investors: First, the securities lending end increased the margin ratio for securities lending; second, the lending end lent the placement shares to strategic investors. Adjustment; third, increase supervision of various improper arbitrage behaviors.

　　Xu Yishan said that improving the fairness of the system is expected to better serve the preservation and appreciation of residents' wealth and benefit the long-term high-quality development of the securities industry.

　　"The optimization of the securities lending mechanism will help effectively protect the legitimate rights and interests of investors. It is expected that more investor-centered investment-side reform substantive measures will be accelerated, which will benefit the long-term development of the securities industry." Liu Xinqi further pointed out, then In the future, it is expected that more substantive measures for investor-centered investment reforms will be introduced at an accelerated pace, achieving continued improvement in long-term returns for investors and benefiting the long-term development of the securities industry. "

　　Liu Xinqi said that under relevant optimization, it is recommended that investors increase their holdings of leading securities firms with more competitive advantages in institutions and asset management businesses. On the one hand, leading securities firms with more competitive advantages in institutional and asset management businesses have benefited from the continued improvement in the attractiveness of the capital market and the continued improvement in long-term returns for investors driven by the continued advancement of investment-side reforms.

　　"On the other hand, as of January 26, 2024, the PB valuation of the brokerage sector is only 1.26 times, and the valuation is at the 5.1% percentile since 2012, with a high margin of safety and high cost performance." Liu Xinqi said.

　　CITIC Securities predicts that based on the initial impact ratio, the scale of securities lending on the Science and Technology Innovation Board and GEM is expected to further drop to about 2.6 billion yuan and 8 billion yuan after the implementation of the new regulations, and arbitrage channels for market illegal holding reductions are expected to be effectively restricted.

　　Tian Zhongfang, senior reporter at The Paper