Standard Chartered and HSBC have become the first two global custodians to facilitate short-selling transactions in mainland China for overseas clients.
The move comes on the back of new measures introduced by China to encourage greater participation from international investors.
In September the financial regulator allowed short-selling and margin financing to be conducted by qualified foreign institutional investors (QFIIs) and RMB qualified foreign institutional investors (RQFIIs) as of December 29, 2020.
HSBC and Standard Chartered are the first two custodians to get their short-selling service up and running following the regulatory approval.
“The latest regulatory relaxations offer more investment instruments to QFII, among which the stock borrowing and lending have always been the most attractive ones that are frequently inquired by many overseas institutional investors,” said Rick Hu, head of securities services at Standard Chartered China.
“The opening of margin financing and short-selling business through QFII/RQFII enables offshore investors to diversify their trading strategies,” said Stephen Pamberton, HSBC’s global head of product, banks and broker dealers, and securities services.
Meanwhile, Citi has announced the successful completion of its first margin trading and securities borrowing transactions for QFII and RQFII clients.
“These new instruments could help global investors achieve more flexible and diversified investment strategies, potentially increasing the return and providing an alternative to hedge market risk,” commented Vicky Tsai, Citi’s China Head of Securities Services.
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