A:

The Chinese stock market has no history of short sales. However, in 2007, the Chinese government, in an effort to increase the types of financial instruments available to market participants, considered introducing short selling to the market. In 2008, the China Securities Regulatory Commission (CSRC) announced that it would introduce margin trading and short selling on a trial basis, which was briefly delayed due to preparations for the 2008 summer Olympics.

After the Olympics, 11 top brokerage firms, including CITIC and Haitong securities, in China received authorization to start the trial short sales program. In other words, these 11 brokerage firms are the only firms allowed to short sell. As of 2009, the only short selling in the Chinese stock market occurs through the 11 brokerage firms that are part of the trial program. As of May 2009, there has not been any announcement by the commission to make short selling a permanent feature of the Chinese stock market.

To learn more, see our Short Selling Tutorial.

This question was answered by Chizoba Morah

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