Leading brokerage firm GF Securities (ASX: 01776) has announced a significant adjustment to the scale limit of its margin financing and securities lending business. The company's board of directors has approved a proposal to raise the total business size cap to a level not exceeding 2.5 times its net capital at the same period. The management is authorized to determine the specific scale within this limit based on market conditions and changes in net capital.
Industry experts believe this shift to a multiple metric tied to net capital follows common industry practice. Several other brokerages that have recently disclosed similar adjustments have generally set their margin financing and securities lending business caps at 3 times their net capital.
Margin financing and securities lending represent a crucial revenue stream for brokerages. Data from the Securities Association of China indicates that in 2025, 150 securities companies generated total operating revenue of 541.19 billion yuan, with net interest income contributing 64.687 billion yuan, accounting for over 10% of the total.
From a market perspective, there has been a significant net outflow from margin financing recently. Statistics show that as of July 17th, the margin financing and securities lending balance for the Shanghai market stood at 14,053.64 billion yuan, a decrease of 38.681 billion yuan from the previous trading day.
Similarly, the Shenzhen market's balance was 13,632.00 billion yuan, down 42.236 billion yuan. The Beijing Stock Exchange's balance was 8.423 billion yuan, a reduction of 252 million yuan. The combined total for the Shanghai, Shenzhen, and Beijing markets was 27,769.87 billion yuan, marking a substantial decrease of 81.169 billion yuan from the day before.
Analyzing by sector, across all Shenwan industry classifications, financing balances decreased. The sectors experiencing the largest reductions in financing balances were electronics, communications, and machinery equipment, with daily decreases of 310.79 billion yuan, 105.34 billion yuan, and 58.52 billion yuan, respectively.
Taking a longer-term view, according to statistics from Sinolink Securities, last week saw a net sell-off of 165.219 billion yuan in margin financing and securities lending. Notably, the net outflow on Friday alone ranked as the fourth-largest single-day outflow in history. On a sectoral basis, net selling was observed across various sectors, with electronics, machinery, and communications being the primary targets.
Only sectors like coal mining, construction, and real estate saw an increase in the proportion of financing purchases. Furthermore, against the backdrop of recent significant adjustments in technology stocks, some market institutions have expressed concern over potential risks from forced liquidations within brokerage margin financing businesses.
Data from the official China Securities Data website shows that as of July 16th, the average maintenance margin ratio for market-wide margin financing businesses was 272.65%, which remains at a relatively high level.
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