Is there short selling in China?

By Chizoba Morah AAA
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

RELATED FAQS

  1. Which day is known as China's "Black Tuesday" and why?

    On February 27, 2007, the Chinese stock market suffered a correction, causing choppy markets all over the world. The Shanghai ...
  2. How long can you short sell for?

    When an investor or trader enters a short position, he or she does so with the intention of profiting from falling prices. ...
  3. What is the difference between shorting and naked shorting?

    Short selling involves borrowing shares of a company’s stock and selling it with the hopes it can be bought back at ...
  4. What is a BRIC nation?

    BRIC is an acronym for the combined economies of Brazil, Russia, India and China. The economies of these four nations are ...
RELATED TERMS
  1. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, ...
  2. Bamboo Network

    A network of expat-Chinese businesses in Southeast Asia. These ...
  3. Foreign remittance

  4. Short Call

    A type of strategy regarding a call option, which is a contract ...
  5. Heckscher-Ohlin Model

    An economic theory that states that countries export what they ...
  6. Sponsored ADR

    An American depositary receipt (ADR) issued by a bank on behalf ...
comments powered by Disqus
Related Articles
  1. A Guide To Key ETFs Investing In South ...
    Mutual Funds & ETFs

    A Guide To Key ETFs Investing In South ...

  2. 10 Timeless Rules For Investors
    Active Trading Fundamentals

    10 Timeless Rules For Investors

  3. Boom or Bust? The End of China's One-Child ...
    Economics

    Boom or Bust? The End of China's One-Child ...

  4. Purchasing A Short-Sale Property
    Home & Auto

    Purchasing A Short-Sale Property

  5. The Uptick Rule Debate
    Active Trading Fundamentals

    The Uptick Rule Debate

Trading Center