China's stock regulator will conduct a nation-wide test of the ability of brokers to handle margin trading and short-selling late next week and aims to launch the initiatives as early as next month, industry sources said yesterday.

The systems at about 10 brokers will be tested on October 25, and they will be accompanied by their custodian banks, the sources said.

The results will decide when the regulator will start margin trading and securities lending, and industry insiders expect the initiatives will be pushed forward next month or in December if the stock market is stable.

The test is in line with the regulator's principle of "test run first and to be extended gradually." China's Securities Regulatory Commission announced earlier this month that it would launch margin trading and short-selling soon, but it didn't reveal the exact time and how many brokerages will be involved.

The regulator also required eligible brokerages to raise margin and set a higher threshold for investors to control risks. Most eligible brokerages are expected set the threshold at 1 million yuan (US$146,320) for clients who have operated their accounts for more than 18 months, according to Shanghai Securities News. "Strict control" is key for the new business, including building up a client pool, sharing credit records with banks and giving special training to clients.

(Shanghai Daily October 17, 2008)