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China Tightens Market Controls With Higher Margin Rules and HFT Curbs

Regulators aim to cool leveraged speculation to steer a steadier rally.

Overview

  • The Shanghai, Shenzhen and Beijing exchanges raised minimum margin requirements for new borrowings to 100% from 80%, effective January 19, with the change not applied to existing contracts.
  • The China Securities Regulatory Commission approved the move and pledged stronger market monitoring, counter-cyclical adjustments, and crackdowns on manipulation and illegal speculation.
  • Futures venues have instructed brokers to relocate client servers away from exchange data centers and are considering added latency on third-party connections, steps reported to target high-frequency trading advantages.
  • Global market-making firms operating in China, including Citadel Securities, Jane Street and Jump Trading, are among those affected by the server-access changes, according to reports.
  • The rapid trading surge that lifted onshore turnover to nearly 4 trillion yuan has cooled, with the Shanghai Composite easing from recent highs and tech-focused gauges slipping as risk warnings from listed companies multiplied.