Recently, brokerage firms have once again shifted the market's focus to adjustments in the Securities Lending and Borrowing (SLB) service. Reports indicate that starting from the evening of April 10, news emerged that several brokerage firms would temporarily halt the addition of new SLB sources, and plan to phase in a temporary suspension of the daily addition of new SLB sources. However, this suspension is not a phenomenon across the entire industry but is limited to North and East China, not affecting the South China region, and is mainly concentrated among companies with a higher number of sources.
This temporary suspension has once again sparked heated discussion and attention in the market. Since the new SLB policy took effect on January 28, the SLB business has undergone a series of adjustments, including the suspension of new scale additions, efficiency restrictions, and the prohibition of restricted stocks being lent out through SLB, resulting in a significant decrease of approximately 48% in the market SLB scale. And now, brokerage firms have once again initiated temporary suspension measures.
It is understood that this temporary suspension may be part of the brokerage firms' preparation before the expiry of securities loans. As the scale of securities lending decreases, some brokerage firms may have adopted stockpiling measures to smoothly transition the gradual settlement process of existing stocks. Analysts point out that due to the time limitations of certain stock sources, a batch of them may expire within the next 3 to 6 months. To avoid market shock at that time, brokerage firms might have taken the current temporary measures to ensure market stability.
Meanwhile, changes in the securities lending business have also affected the scale of related quantitative private equity strategies. The market is concerned that the continuous decline in securities lending scale is affecting the operation of quantitative long-short strategy products. Some institutions might consider discontinuing related businesses or moving operations to overseas markets. However, expanding business overseas presents certain legal and operational challenges, and not all institutions may be able to implement it smoothly.
In this context, the market has shown keen interest in the regulatory adjustments to the securities lending business and the response strategies of private equity institutions. The process of optimizing the capital market ecosystem is also continuing, with the dynamic changes in the securities lending business being an important component thereof.
