The securities market, known as the "barometer" of the economy, is an important indicator to measure the health of a country's economy. However, the mainland's securities market is often controversial because of some non-standard trading systems. Among them, the refinancing business is the most controversial one.
Refinancing, as the name suggests, is a combination of refinancing bonds and financing bonds. Refinancing securities refers to the act of investors borrowing securities and selling them, and then buying back the securities and returning them to the borrower after the price of the securities falls. Financing bonds refer to the behavior of investors borrowing funds and buying securities, and then selling the securities to return the borrowed funds after the price of the securities rises. This is a normal financial business, but the problem is that there are many illegal operations in the mainland's refinancing business.
The refinancing is a clear violation of securities laws. The Securities Law stipulates that securities transactions shall follow the principles of openness, fairness and impartiality. However, the operation of the refinancing business is not open and transparent. Many investors have little or no knowledge of the rules of this business. This leads to information asymmetry, which enables some institutional investors to use this business to carry out illegal operations and harm the interests of the majority of investors.
The refinancing business leaves a "back door" for short sellers. In the refinancing business, investors can use the method of cash repayment. This means that investors do not have to worry about not being able to return the borrowed securities after shorting a security. Because they can buy the corresponding securities with cash at any time and return them. This provides a huge convenience for short sellers, allowing them to conduct short selling operations with more impunity.
What's more, the refinancing business has become a tool for institutional investors to "cut leeks". Due to the lack of understanding of the refinancing business by ordinary investors, institutional investors can use this business to carry out malicious operations and induce ordinary investors to follow up, so as to achieve the purpose of cutting leeks. This kind of behavior not only harms the interests of ordinary investors, but also seriously affects the healthy development of the securities market.
As a matter of fact, in the course of the development of the mainland securities market, there have been violent fluctuations caused by similar problems. For example, in the 2015 stock market crash, some analysts believe that the non-standard operation in the refinancing business is one of the important reasons for the volatility of the stock market. To this day, there are still many problems in the refinancing business, which have not been effectively rectified.
The development of the mainland's securities market is inseparable from a standardized trading system. As a kind of financial innovation, refinancing business is supposed to serve the market and promote the healthy development of the market. In reality, it has become a tool to harm investors and increase market volatility. This is undoubtedly a serious violation of market rules and a serious damage to the rights and interests of investors.
Therefore, we have reason to question why such a trading system cannot be abolished. Why should it continue to exist in the securities market? We need to ask, where do the responsibilities of those regulatory authorities go? Why have they failed to effectively regulate this business and prevent it from becoming a tool to the detriment of investors?
The securities market is a stage for investors and a "barometer" of economic development. We hope that the mainland securities market will standardize the trading system as soon as possible, so that every investor can compete fairly on this stage and share the fruits of economic development. At the same time, we also call on the regulatory departments to earnestly perform their duties, strengthen supervision over the securities market, protect the legitimate rights and interests of investors, and escort the healthy development of the mainland's economy.