China asks brokerages to curb leveraged stock trades

<p>China asks brokerages to curb leveraged stock trades</p><p><a href="https://piqsuite.com/reuters/exclusive-china-asks-brokerages-to-curb-leveraged-stock-trades-sources" target="_blank" rel="nofollow">FULL STORY</a></p><p>China's securities watchdog is asking brokerages to restrict leverage available to hedge funds that borrow large sums of money via a complex derivative business to trade stocks, three sources told Reuters. </p><p>Hedge funds using the so-called DMA-Swap strategy were told by their brokers late on Wednesday to start limiting leveraged bets, two sources who received notices from regulators said.</p><p>Through the DMA-Swap, hedge funds can borrow up to $4 against every $1 they deposit with the broker in the margin account, while also skirting regulatory borrowing limits by having such trades sit on brokers' books.</p>

This article was written by Ryan Paisey at www.forexlive.com.