CITIC Securities Co, Haitong Securities Co and China Jianyin Investment Securities Co will be listed for a pilot program that will let brokers lend capital or securities to retail investors, the Economic Observer said on Friday.

The first batch of five securities companies allowed to take part in the program, with two yet to be chosen, will be unveiled officially later this month, the newspaper said citing an unnamed official with the Shanghai Stock Exchange.

The program was part of the preparation for the launch of stock index futures, which allows investors to sell short for the first time.

Last week, the China Securities Journal said China was set to introduce the program at the right time and in a controlled manner, quoting an unnamed official with the China Securities Regulatory Commission.

Program rules

The CSRC official said China has basically wrapped up drafting rules for the program and may start a trial before expanding it on broader base.

China has passed in principle two draft rules on the supervision and risk management of securities companies, paving the way for the introduction of margin trading and securities lending.

CITIC Securities is China's largest brokerage firm by market value, followed by Haitong Securities. China Jianyin has a good reputation among clients and has had its assets optimized after a recent restructuring.

The net income of CITIC Securities rose to 2.52 billion yuan (US$36 million) in the first quarter, from 1.25 billion yuan a year earlier.

Haitong Securities reported its profit increased 29.2 percent year on year to 936 million yuan at March this year.

(Shanghai Daily May 4, 2008)