Securities market in China waiting for changes
2022.12.16 04:37
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Securities market in China waiting for changes
Budrigannews.com – China’s securities regulator announced on Friday that a reform to bring the country’s securities settlement system more in line with international standards will begin this month in an effort to attract foreign funding.
In January, the China Securities Regulatory Commission (CSRC) released draft securities settlement rules based on Delivery Versus Payment (DVP), a worldwide practice in which stocks and cash are settled simultaneously.
Stocks are currently settled on the day they are traded on China’s equity market, whereas cash is settled the following day.
The CSRC said on Friday that it will send off the DVP change on Dec. 26.
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According to the CSRC, the reform will keep the current practices the same but use labeling to link the delivery and payment of securities and make it clear how to deal with contract breaches.
The watchdog stated that while it won’t affect trading or investment, it will make the settlement system safer and “further attract foreign capital into China’s market.”
China’s reform of its settlement system has been a long-term goal for international investors. The body representing the financial sector, ASIFMA, has stated that the differences result in increased costs as well as risks for brokers representing overseas investors.
