Shenzhen, China-based broker-dealer, Fox Capital Partners, says it is welcoming the China Securities Regulatory Commission’s (CSRC) decision to rescind a rule which forced brokerages that trade on their own accounts to hold daily net long positions.

The rule was hurriedly introduced at the height of the summer rout to prevent short-selling – where an investor bets the price of a security will fall – as the regulator battled to stabilize huge falls on the country’s two main stock indices after a long and protracted run of gains since 2014.

Proprietary trading – where brokerages invest and speculate on markets with their own funds – has become more widespread in China’s markets and now accounts for as much as 50% of revenues at some of the large players.

“We’re still a private company so details of the proportion of our revenue we derive from proprietary trading isn’t a matter of public record but I can confirm that we were never part of the problem that pushed stocks lower during the worst trading sessions in the summer,” explained Liu Chen Wei, Chief Equities Strategist at Fox Capital Partners.

The regulator has publicly blamed short-selling by profiteering brokerages for the summer stock market
rout but the brokerages maintain that it was the regulator’s over-zealous efforts to reduce the use of margin trading and leverage by inexperienced investors that triggered a sharp drop in liquidity which lead to the precipitous falls.

Fox Capital Partners said it regarded the CSRC’s rescission of the net long rule as further evidence of a return to normality in the Chinese markets.

About Fox Capital Partners
Fox Capital Partners is a successful, independent investment management practice established in Shenzhen City, China and headquartered in Shenzhen. Our highly-qualified professionals advise on a wide array of wealth accrual, preservation and portfolio management solutions aimed at affluent individuals and families in Asia and elsewhere.