The China Securities Regulatory Commission has issued draft rules on which funds cannot be used for entrusted loans–a form of inter-company loan in which one firm acts as a lender and records the loan asset on its balance sheet while banks acting as intermediaries collect a fee, Reuters reported, citing an announcement on the commission’s website. Entrusted loans have become an alternative channel to margin lending from brokerages, which the commission announced on Friday it would crack down on, prompting stock prices in Shanghai to plummet.
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