China Securities Regulatory Commission (CSRC) announced a string of supportive policies, including a 30-percent transaction fee cut and relaxation on margin trading rules, as fears grow for a market plunge.
The amended rules on margin trading, whose draft were scheduled to be on public consultation till July 11, were released on Wednesday evening "in haste for special circumstances", said the securities watchdog on its official microblog weibo.
Market volatility has increased over the past two weeks as investors diverge on whether A-share's year-long bull was peaked.
The benchmark Shanghai Composite Index sank 5.2 percent to close at 4,053.7 on Wednesday, following its biggest swing since 1992 of 432 points.
Additional guaranty through discussion
Brokerages and margin investors can decide through discussion on when and how much percentage of additional guaranty should be put instead of compulsory sell-off, according to the amendment.
The previous rule stipulated that investors should make additional guaranty in two trading days if the ratio of capital they borrowed from brokerages reaches the 130 percent of warning level.
Brokerages will be able to extend contracts with their clients as long as the maximum term is under 6 months, the amendment said.
In addition, individual investors who have a margin trading account with securities asset below 500,000 yuan ($82,000) are allowed to continue their margin trades.
Xiao Gang, chairman of the CSRC, signed off the revised rules on Wednesday, which are effective immediately.
Brokerages allowed to issue bonds
The securities watchdog on Wednesday also announced allowing brokerages to issue bonds and explore securitization of margin trading business to widen their funding channels.
All brokerages are now allowed to issue short-term corporate bonds via stock exchanges and private equity trading systems between institutions, as previous trial among 20 brokerages proved a success, said Zhang Xiaojun, spokesman of the CSRC, in a separate announcement.
Brokerages and subsidiaries of fund management companies are also allowed to explore securitization of the right derived from their margin trading businesses, according to the announcement.
30-percent cut on transaction fees
The two major stock exchanges and China Securities Depository and Clearing Company will lower transaction fees and transfer fees, said the CSRC.
Fees have been cut to 0.0487 permillage from 0.0696 permillage of the transaction volume for A-share trading, with 20 percent of the charges transferred to an investor protection fund, according to a joint statement of Shanghai and Shenzhen bourses.
The CSDC, in addition, will lower transfer fees to 0.02 permillage of transaction volume from 0.3 permillage and 0.0255 permillage for Shanghai and Shenzhen exchanges respectively, with the cuts will take effect on August 1.
Market concerns the high valuation lacks supportive fundamentals, as the country's benchmark Shanghai gauge jumped 32.2 percent in the first half of the year, while the Shenzhen index rallied 30.2 percent.
Chinese stocks fell for three days this week, with the Shanghai gauge retreating 8 percent.
Xinhua contributed to this story.
