February 2, 2015 / 1:51 AM / 3 years ago

China's Huatai Securities ups threshold requirement for margin trading

SHANGHAI, Feb 2 (Reuters) - China's Huatai Securities announced it would increase the cash margin ratio for investors to trade in exchange-traded funds (ETFs) and stocks, as Chinese brokerages adjust to a crackdown on excessive margin finance.

The margin ratio is the ratio of cash to credit investors can use to invest, with 100 percent implying an investor could only invest in cash.

Huatai will raise its ratio from 50 to 60 percent for ETFs, and from 60 to 70 percent for stocks, the brokerage announced on its website on Sunday. The measures are effective from Monday.

Chinese regulators are probing illegal margin trading which is believed to be fuelling the country's stock market rally.

The first round of investigations targeted at three major brokerages stunned the market, triggering more than a 7 percent tumble on January 19.

Regulators relaunched investigations into the stock margin trading business of 46 companies on Thursday last week.

Reporting by Sue-Lin Wong and Lu Jianxin; Editing by Shri Navaratnam

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