The Associated Press, November 9 (Reporter Yan Jun) On the evening of November 8, a piece of "DMA business of securities companies is under control" was quickly fermented on the social platform.
The reporter from the Associated Press of Finance learned exclusively from many sources that many securities companies have received regulatory notices requiring that from November 9 (today), the end of day quantitative DMA business [nominal principal size=max (long and short portfolios, short and long portfolios)+non long and short portfolios] should not exceed the end of day size on November 8, Quota adjustment can be made between different products under the manager.
At the same time as the quantitative DMA business, the scale of OTC individual stock lending is also restricted. The notice shows that from November 9, the nominal principal scale of OTC individual stock lending at the end of each day (ETF is not affected temporarily, and will be notified later if there is a caliber update) according to the manager's dimension cannot exceed the nominal principal scale at the end of November 8, Quota adjustment can be made between different products under the manager.
After it is clear that DMA and other businesses are restricted, rather than stopped, what are the reasons for regulating the new scale of OTC derivatives of individual stocks? Is reducing OTC innovation business to limit short selling? How much impact will it have on all parties? Focusing on these issues, reporters from the Associated Press of Finance and Economics explained the impact of this requirement to many insiders.
Interpretation 1: The original intention is to prevent the capital space from being opened to rush to heavy capital business
Despite the heated debate, the insiders believe that the regulatory requirements for controlling the new scale of OTC derivatives such as DMA and OTC individual stock financing are not surprising. The fundamental reason for this is that the supervision requires securities companies to do a good job in capital intensive, professional and steady development.
Since November 4, the CSRC has made a new round of adjustment and revision to the risk control indicators of securities companies, aiming to encourage securities companies to carry out investment banking, market making, asset management and other businesses, and further guide securities companies to make efforts on the investment side, financing side and trading side. To prevent securities companies from running away from derivatives or other heavy capital businesses and deviating from the original policy after opening the capital space.
It was pointed out that the regulation requires securities companies to adhere to the principle of intensive specialization, prudently carry out capital focused business, urge securities companies to focus on expanding the capital market services such as market making, investment tracking and investment banking after the opening of the capital space, and effectively control the business scale of OTC derivatives, margin trading and unilateral proprietary trading, In particular, the size of individual stock derivatives contracts (nominal principal) shall not exceed the size of their respective stock contracts on the date of soliciting opinions in the Calculation Standards.
"The moderate control of DMA business reflects the regulatory guidance of the regulator to revise the risk control indicators of securities firms and optimize investment banking, market making, asset management and other businesses." The person pointed out.
Journalists from the Associated Press of Finance have reported on the DMA project of securities companies, and the market has paid high attention to this innovative product. DMA business, that is, long short income swap, mainly refers to the leverage of quantitative funds through the proprietary trading desk of securities firms. In DMA, the private placement pays 20% of the margin to the brokerage trading counter, and the latter can give 80% of the capital after receiving the margin, which is equivalent to quadrupling the leverage, which can also understand a way of quantitative strategy financing.
A non bank analyst from a securities firm said that DMA business is one of the derivatives businesses that various securities firms currently focus on studying and developing, mainly replacing the AB swap business that was previously suspended by the regulator; Essentially, it is to use the system of securities companies to carry out long short swap, which mainly refers to the form of quantitative funds adding leverage through the proprietary trading desk of securities companies. From the perspective of private placement and leverage, it can be seen that the capital of securities companies is occupied largely. If the new scale is not constrained, securities companies may exert more efforts in this business after the capital is opened, which will bring certain risks.
Interpretation 2: Controlling DMA scale cannot be simply understood as reducing short exposure
As for the question raised by some investors about "whether the DMA business is regulated to limit short selling", some analysts pointed out that although the DMA business is a product type of quantitative private placement, it has both long and short positions, not simply a reduction of short selling power under market understanding.
Therefore, the person believed that the purpose of limiting the new increase probability of DMA scale was to reduce the leverage ratio of specific businesses, free up capital and develop business modules supported by supervision, including market making, investment tracking and other businesses.
However, some securities traders pointed out that the scale of OTC derivatives short selling is not small, and most of these short selling stocks are in the ranks of CSI 300, CSI 500 and other blue chips. If this part is also restricted, it will be beneficial to the blue chips in the current market.
Interpretation 3: How do all parties affect?
At present, there is no official statistical data on DMA business in the market, but the reporter from the Associated Press of Finance learned from many private equity and securities companies that the scale of DMA business in China is about 400 billion yuan, which has exceeded the scale of snowball products. What impact will the new scale of innovative business management and control bring about?
Industry analysts pointed out that measuring and evaluating the impact of the regulatory requirement on all participants also depends on the benefits of all parties. From the perspective of securities companies, DMA products should meet the linkage demand of high-frequency trading. Some securities companies have built their own DMA systems, which can be used by customers in the scenario of income swap. Customers place orders and submit them to the exchange through the securities companies' proprietary system. The cost of the special system may cost tens of millions.
There are three main benefits for securities companies:
First, it can contribute to the trading volume, which is reflected in the increase of share based turnover and market share;
The second is to increase the scale of custody. Private custody is the key business transformation direction of securities companies in recent years;
The third is to provide leverage funds to obtain certain interest income.
In terms of private placement, since this year, many small and medium-sized quantitative fund companies have rapidly expanded their DMA business and even become 10 billion private placement companies thanks to the outstanding yield of DMA business. However, it should be noted that there is compliance risk in selling DMA products to individual investors.
A private person pointed out that the sale of DMA products with high leverage to individual investors violated at least two regulations, namely, the Administrative Measures for Income Swap Business of Securities Companies and the Guidelines for the Operation of Private Securities Investment Funds (Draft for Comments).
First, according to Article 12 of the Measures for the Administration of Income Swap Business of Securities Companies, "the counterparty of income swap should have the real demand for asset allocation risk management and meet the standards for professional institutional investors specified in the Measures." The regulations show that the counterparty of income swap should be an institutional investor, not an individual investor.
Second, the Guidelines for the Operation of Private Securities Investment Funds (Draft for Comments) requires that derivatives transactions should not be alienated into leveraged financing instruments such as stocks, bonds and other over-the-counter targets, and should not provide channel services for fund sales agencies to sell derivatives with specific structures to natural person investors, It is not allowed to provide derivatives trading channel services for investors who do not meet the standards of professional traders. In addition, in terms of total leverage, the total assets of a private securities investment fund shall not exceed 200% of the net assets of the fund. That is, the leverage cannot exceed twice.
It can be seen from this that after the control of DMA's new business, securities firms may be restricted and affected in terms of trading volume, custody scale and capital income, while small and medium-sized private placements may lose a key product for large-scale curve overtaking.
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