Lenders Can't Sell Restricted Stock, Ask for More Stock

Regulators have stepped in to prevent sales of restricted stock and some lenders are asking for more stock for collateral.

JRJ: 股票质押风险遭密集排查 有券商专项申报违约情况

The reporter was informed that some brokerage companies recently received regulatory requirements and made special declarations on stock pledges, paying particular attention to the situation of default and passive extension, but it is not mandatory that positions cannot be closed.

A person in charge of the listed brokerage credit trading department revealed that: “The stock pledge repurchases differ from the two kinds of financing, and the restricted shares cannot be closed, and the new regulations should be strictly observed. In general, closing a position is the last resort to be forced. An effective way to do a good job of risk control is to allow customers to reserve more shares outside the pledged shares to make up for their positions."

In addition, there are also many securities companies that have high requirements on the pledged items. Some relevant person in charge of securities companies said: "The risk does exist, and now the requirements for the project are high, and there is no resolute decision."

...“Regular reporting of stock pledges has always been the case, but the recent supervision also requires special reporting, with particular attention to the situation of breach of contract and passive extension. There was no such request for detailed information in the past.” A large securities company in East China stock pledge business told reporters.

...In particular, the new rules for reducing shareholdings stipulate that “maximum reduction of the total share capital by 1% through competitive bidding transactions within 90 days”, “no reduction in shareholdings within half a year for major stock transactions,” and “15 days of advance trading for major shareholder reductions in shareholdings” When other situations arise, the broker must negotiate with the pledgor.

"The stock pledge repurchases and the two financial differences, restrictions on the sale of shares can not be closed, the new regulations should be strictly abated." The head of a credit trading department of a listed securities company in southern China, said, "Closed position is always the last resort, most customers still It will make up the position according to regulations."

The head of a large brokerage sales department said that a stockbroker may have only two or three hundred stock pledge customers, and the amount of hundreds of millions of dollars in pledges can easily bring millions of profits to brokers. All are quality customers.

He said frankly: “The brokers will not close their positions as long as they have no choice. For brokers who have reached the liquidation line, the brokers will try their best to help them solve the crisis. For example, this company has no money, brokers will first help find the bridge. Capital, and other companies have the money to make up the percentage of security."