China to launch stock rights trading system

China will keep its pledge of a stock rights trading system in June to lower the financing interest rate amid fierce competition in the brokerage market, the Shanghai Securities Journal reported on May 9.

The trading system will enable machtmaking transactions. Brokerages with access to the system may submit quotes of funds and interest rates, from which one can choose in the inquiry process, according to the report.

A source with a brokerage that has already received a circular about the trading system said trading through the system will be free in the early stage of operation.

Brokerages qualified to operate securities margin trading may join the system when it is introduced. The system may be open to all brokerages in China eventually.

Analysts said such a trading system may add more pressure to brokerages to secure profit growth as interest rates may be further lowered amid increasingly fierce market competition when the system opens to more fundraisers.

For brokerages, it will also be more difficult to retain clients because fundraisers can have a wider ranges of choices from the online trading system.