November 1, 2018 / 1:47 AM / 6 months ago

China incentivises stock brokers to aid struggling listed firms - media

SHANGHAI, Nov 1 (Reuters) - Chinese regulators will give higher ratings in annual risk evaluations to stock brokerages who are able to help ease listed companies’ margin call pressures, the official Shanghai Securities News reported on Thursday.

The regulatory tweak would be among a handful of relaxations aimed at restoring confidence in China’s stock markets, which have been weighed down by a massive amount of shares pledged as collateral as credit-starved firms seek to raise funds.

In addition, loss provision requirements would be halved for investments brokerages make in various asset management schemes dedicated to aiding private firms, the newspaper said, citing a notice from the China Securities Regulatory Commission.

Meanwhile, rules designed to prevent excessive risk concentration in securities investment would be eased, if the violation is the result of efforts to mitigate risks associated with pledged share financing, according to the article.

China has launched a raft of measures over the past week to stem the stock market slide and ease margin call pressures on firms that otherwise have reasonable growth prospects.

The 20 percent slump in the broader market this year has triggered margin calls, liquidations, bond defaults and other disruptions at hundreds of firms.

Local governments have set up funds designed to give liquidity support to private-run companies, while regulators are encouraging share buybacks and mergers and acquisitions.

The asset management unit of China Life Insurance also aims to raise 20 billion yuan ($2.87 billion)in a product dedicated to easing liquidity pressures at listed companies, the Securities Times reported on Monday. ($1 = 6.9737 yuan) (Reporting by Samuel Shen and David Stanway; Editing by Sam Holmes)

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