The proportion of minimum settlement provisions for stock businesses will be reduced from now on to release nearly 40 billion yuan

On October 16, the arrangement for China's settlement differentiation to reduce the payment ratio of the minimum settlement provision for stock businesses came into effect, which reduced the payment ratio of the minimum settlement provision for stock businesses from the original 16% to an average of nearly 13%, nearly 40 billion yuan more than the funds released in September.

It is understood that the differentiated reduction of the minimum settlement provision payment ratio of stock business is a reform supporting measure formulated by CSDCC under the strong leadership of the CSRC to enhance the sense of gain of settlement participants in the reform of DVP.

According to the Measures for the Management of Settlement Reserves (Revised in August 2023) issued by CSDCC on August 4, the specific proportion parameters of the differential adjustment of the minimum settlement reserves for stock businesses in China's settlement are: the corresponding payment proportions before 9 o'clock, before 11 o'clock and after 11 o'clock are 13%, 15% and 16% respectively, and the corresponding withdrawal proportions before 9 o'clock and after 9 o'clock are 16% and 13% respectively; For custody business with fixed minimum settlement provision ratio, the minimum settlement provision ratio for stock business is reduced from 16% to 15%. According to the above arrangements, the minimum payment ratio of settlement provisions for stock business of settlement participants is 13%.

The insiders said that this measure will help encourage settlement participants and customers to complete the capital settlement as soon as possible, and further improve the capital use efficiency of securities companies, fund managers and other market institutions.

According to the internal communication of the industry, since the implementation of DVP reform on December 26, 2022, in order to meet the requirements of DVP reform, securities companies have basically gradually adjusted their settlement habits in brokerage, margin trading, proprietary business and other businesses, and achieved early payment. From the actual effect of this reduction, more than 90% of the brokerage, margin trading, and proprietary business settlement participants have reduced their minimum settlement provisions for stock business to 13%, greatly improving the efficiency of capital use of market institutions.

It is reported that since 2019, China Securities Depository and Clearing Corporation Limited has lowered the minimum settlement provision ratio for stock business twice, respectively from 20% to 18% in December 2019 and from 18% to 16% in April 2022, which has been unanimously affirmed by market institutions.

This differential provision reduction arrangement is the third time in four years that China's clearing companies have reduced the minimum provision ratio, and the reduction efforts are far ahead of twice, bringing more financial "live water" for the release of larger funds from the market.

CSDCC said: "After full calculation and preparation in the early stage, on the basis of ensuring the security of the settlement system, we will further strengthen the refinement level of settlement risk management to achieve greater efforts to reduce the payment ratio of the minimum settlement provisions."

key word: Provisions settlement proportion business