Why does Nomura believe policy has shifted toward market stabilization?

  • On 2 November, the central bank held a meeting with the National Financial Regulatory Administration and the China Securities Regulatory Commission to accelerate the use of two existing tools to curb recent declines in mainland stock markets.
  • Nomura believes the meeting and actions show policymakers are concerned about the effects of sustained stock-market declines on the financial system and the broader economy, particularly the potentially higher risk of margin calls on leveraged positions.
  • Both tools were introduced about two years ago, and Nomura believes their impact should not be overstated; near-term stock performance will depend largely on the extent of national team intervention.

What support can the third round of the swap facility provide?

  • The central bank announced that the third round of the Securities, Funds and Insurance Companies Swap Facility (SFISF) would begin on 3 November. As of the report’s publication, the combined quota requested by 31 securities firms and asset managers had exceeded 100 billion yuan, close to the 105 billion yuan actually transacted across the first two rounds combined.
  • Eligible institutions can swap bonds, equity ETFs and constituent stocks of the CSI 300 Index, among other assets, for highly liquid assets such as central bank bills, which can then be used to obtain capital-market financing. The central bank also plans to broaden the range of participating institutions, appropriately lower swap fees and refine the operating model.

How have the cost and scale of repurchase financing changed?

  • The interest rate on relending for share repurchases and stake increases was cut from 1.25% to 1.0%, a reduction of 25 basis points, making it the lowest rate among the central bank’s relending facilities.
  • By the end of October 2026, cumulative loan applications under the facility totaled 440 billion yuan, of which 280 billion yuan had been disbursed, including loans to China Reform Holdings and China Chengtong, two state-owned capital operation platforms.
  • According to Securities Times, a large state-owned bank plans to grant each of the two institutions an additional 100 billion yuan in repurchase loan facilities; the total quota planned for this round has not yet been disclosed.

What other adjustments have been made to repurchase and margin-financing rules?

  • The China Securities Regulatory Commission has eased repurchase restrictions, urged companies to accelerate buybacks and encouraged actively managed ETFs to deploy investments more quickly. For example, market-support buybacks may be permitted when a share price falls below its offering price, and the requirement for a company to have been listed for at least six months has been removed.
  • The commission also said it would work with exchanges to guide securities firms in studying improvements to risk-control metrics, including margin ratios, collateral security conversion rates and maintenance collateral ratios. By comparison, in January 2026, the minimum margin ratio for purchases financed on margin was raised from 80% to 100% to cool the stock market’s rise at the time.