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Regulators Limit Pledged-Stock Loans

The revised guidelines on pledged-stock borrowing, which will take effect on March 12, stipulate that pledged-stock repurchase contracts cannot be longer than three years. Photo: Visual China
The revised guidelines on pledged-stock borrowing, which will take effect on March 12, stipulate that pledged-stock repurchase contracts cannot be longer than three years. Photo: Visual China

Regulators have tightened rules on pledged-stock loans in a bid to curb reckless borrowing by major shareholders and steer capital raised through pledged stocks into the real economy.

Pledged-stock repurchase agreements are a method used by major shareholders of listed companies to get funding from financial institutions by pledging their shares and then agreeing to buy them back at a prearranged date.

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