(Yicai Global) March 18 -- China’s central securities depository has said it will cut the minimum settlement reserve payment ratio for brokerages to maintain the stable development of the capital market and reduce market fund costs.

China Securities Depository and Clearing announced yesterday that it will lower the minimum ratio to 16 percent from 18 percent starting next month, while also reducing or waiving some registration and settlement fees.

The change will lead to an increase in the amount of disposable cash flow of the brokerage and proprietary business of securities firms, lowering relative capital tie-up costs, Beijing Business Today cited Wang Jianhui, a securities sector veteran, as saying.

It will release about CNY20 billion (USD3.15 billion), Shanghai Securities News reported.

Settlement reserve refers to the funds deposited by brokers with clearing houses for the purpose of clearing and settling securities transactions, mainly to secure fund settlement and prevent settlement risks.

The non-bank team at Shenwan Hongyuan Group said the policy was also in response to the spirit of the March 16 meeting of the cabinet’s financial stability and development committee.

The meeting stressed the introduction of policies favorable to the market, and said financial institutions must look at the bigger picture and firmly support the development of the real economy.

Editor: Peter Thomas