CHINA is currently amending rules on margin trading and short selling and will publish them when the “time is ripe,” the securities regulator said Friday.

    The move comes as official scrutiny of a tool that has helped push the country’s stock market to a seven-year high intensifies.

    Zhang Xiaojun, a spokesman for the China Securities Regulatory Commission (CSRC), made the comments at a weekly news conference. He said the CSRC is revising the rules in a bid to achieve “orderly development” in brokerage firm’s margin trading and short selling businesses.

    Margin trading allows investors to borrow cash from brokerages to buy stocks, while short selling involves borrowing shares from brokerages in order to sell them, with the aim of buying them back more cheaply and thereby make a profit.

    Margin trading volume in China has repeatedly hit record highs in recent months, helping the nation’s stock market rally after the government eased monetary policy and stepped up infrastructure spending to boost a weakening economy.

    But the increased use of borrowed money by retail investors, who dominate China’s stock trading, also increases the risk of ruinous losses, which has raised concerns about the threat to social stability.

    The amount of outstanding margin loans for stock trading has more than doubled this year and stood Thursday at 2.17 trillion yuan (US$350 billion), data provider Wind Info said.

    This rapid growth has been a key driver of the market’s stellar performance this year. The benchmark Shanghai Composite Index gained 1.5 percent Friday to finish 5,023.10, its highest close since January 2008. The index has risen 55 percent this year, one of the best performances in the world. (SD-Agencies)