(Yicai Global) April 11 -- Shares in many Chinese securities firms advanced today after the country’s main financial institution that provide loans to brokerages for margin financing and securities lending said it is lowering the margin ratio by up to 15 percentage points so as to help them with their refinancing business.

Orient Securities [SHA:600958] closed up 4.8 percent at CNY11.70 (USD1.70) today. Citic Securities [SHA:600030] edged up 1 percent to finish the day at CNY21.34. China Galaxy Securities [SHA:601881] closed up 1.7 percent at CNY10.41.

Those brokerages with ample funds and a good reputation have had their margin financing ratio trimmed to between 5 percent and 10 percent from 20 percent, while the others have had their margin ratio reduced to 15 percent from 25 percent, China Securities Finance Corp. said yesterday.

And the CSF has reduced the margin ratio when brokerages borrow equities for their market-making business on the Shanghai stock exchange’s Star Market. The margin ratio for those securities firms with adequate funds and a good credit history have been dropped to 5 percent from 10 percent, and for the others they have been lowered to 10 percent from 15 percent.

Market makers are third parties such as brokerages who act as intermediaries in stock trading, and who profit from profit from the spread between buy and ask prices. By borrowing money from CSF they can lend money to their clients to purchase equities. They can also borrow equities from the CSF to sell if they do not have enough stock in hand.

The reductions in margin ratios have cut the amounts payable to CSF by 65 percent, or CNY30.1 billion (USD4.5 billion), based on outstanding debts as of April 7. This will play a positive role in the development of the two businesses, the CSF said.

Editors: Xu Wei, Kim Taylor