Chinese exchanges have reinstated a 100% minimum margin ratio requirements for leveraged securities trading.

The requirement was reduced to 80% in June 2023, boosting margin trading and transaction volumes. As activity and liquidity in the margin trading market has increased, and in line with counter-cyclical adjustment arrangements, the China Securities Regulatory Commission (CSRC) has approved a return to the 100% ratio for new contracts.

Outstanding margin contracts and their rollovers will retain the 80% requirement.

This change will reduce leverage levels and safeguard investor rights and interests, the Shanghai Stock Exchange noted, while encouraging stable market momentum.

According to CEIC data, margin transactions at the Shanghai Stock Exchange reached a peak of RMB 1.34 trillion (US$192 billion) outstanding on 14 January. An all-time record high of RMB 1.5 trillion (US$215 billion) was recorded on 18 June 2015.

Last year, exchanges spoke to regulators about limiting colocation services in the country.

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