Margin trading, short selling may be put on hold

Beijing is poised to delay the launch of margin trading and short selling amid fears that the new mechanisms will increase market volatility, the South China Morning Post reported. The launch was originally scheduled for next month. A source close to the China Securities Regulatory Commission said senior officials believed margin trading and short selling could expose investors to heavy losses. The Shanghai Composite Index is already down 66.33% so far this year. Short selling – whereby investors borrow shares and sell them with the intention of buying them later on once the price has dropped – has been widely blamed for recent volatility in other markets to the point that some governments have banned the practice. It was thought that margin lending – borrowing money from brokerages to buy shares – might help out the struggling markets as brokerages have more cash than equities to lend to clients.