Mainland stock exchanges tighten restrictions on margin trading

The Shanghai and Shenzhen stock exchanges have raised margin requirements from 50% to 100% in a move meant to prevent systemic risks from building up in China’s financial system, Bloomberg reported, citing a statement from the Shanghai bourse. The rule change limits margin investors to borrowing from brokerages only as much is in their current account, rather than double that as was previously the case–and which helped intensify this summer’s equities boom-turned-bust. Margin financing has risen for the last six seeks after falling by more than half during the rout. The Shanghai exchange said in a microblog post that the move would reduce leverage and ensure “healthy development” of the market.