July 7, China may bring forward its trial scheme for margin trading and short selling after its top securities regulator recently dispatched surveys to 15 qualified brokerages that may form the next batch of pilot firms to take part in the scheme to enquire about their level of preparation.

China began the trial margin trading and short selling scheme on March 31, and approved six brokerages as the first batch of pilot firms to take part in it.

At the beginning of June, the China Securities Regulatory Commission (CSRC) approved another five brokerage firms to take part in the trial, and lowered the threshold for participating brokerages.

Under the new rules, a brokerage with net capital of RMB 3 billion and a “B” grade rating from the regulator can apply to take part in the pilot scheme. Participants previously needed net capital of RMB 5 billion and an “A” grade rating. Investors still need at least RMB 500,000 to open a new account.

The 15 brokerage firms being surveyed, which are smaller in terms of business scale compared to the previous 11 pilot firms, have met the new criteria, according to a CSRC publication.

Nine of the 15 brokerages, including Guoyuan Securities Co. Ltd. (000728.SZ) and Essence Securities Co. Ltd. have an “A” grade rating from the regulator and are expected to form the third trial group.

By the end of June, the outstanding balance of margin trading and short selling on the Shanghai and Shenzhen stock exchanges totaled a mere RMB 1.49 billion, a small fraction of the total trading volume on the domestic stock markets.

Analysts reckoned that the speeding-up of the approval process indicates the government is hoping the new business areas could provide better market liquidity and spur the development of new financial products.