Haitong Securities Co will become the first Chinese mainland broker to try out margin trading when it arranges no more than 4 billion yuan (US$585.6 million) in a trial program.

According to a statement filed to the Shanghai Stock Exchange yesterday, the board members of Haitong unanimously approved the program which is being tried out prior to the launch of margin trading in the country.

Margin trading allows retail investors to pay a certain amount of money as margins and lets brokers fund the rest of the stock purchases. It enables individual investors to borrow funds from qualified brokerages to buy stocks. Margin trading is allowed in most bourses globally and serves as a risk-aversion tool.

China's securities regulator said last month that it would soon launch the highly anticipated margin trading and short-selling of stocks on a trial basis to strengthen the domestic equities market.

Haitong's net capital by the end of last year totaled 34.5 billion yuan, making it the biggest brokerage on the mainland by market value. However, its net income fell 1.4 percent to 2.01 billion yuan in the first half of this year, as the country's equity market plunged.

(Shanghai Daily November 19, 2008)