(Yicai Global) Dec. 15 -- The market-making and securities lending business of the Shanghai Stock Exchange's Nasdaq-like Star Market reached CNY177 million (USD25.4 million) in the first month after it started.

Market makers and securities lenders traded 5.8 million shares in the month ended Dec. 13, with the number of market-making stocks lent reaching 28, according to state-owned financial services broker China Securities Finance.

The business was introduced as a supporting measure for the market-making and trading of Star Market stocks on Nov. 14. At launch, the scale of market making and securities lending was CNY7.2 million (USD1 million), CSF data showed.

It is still early days for both practices on the Star Market, Zheng Pingde, head of the market-making business of Sinolink Securities, told Yicai Global. Market makers are focused on gaining experience through loaned securities and exploring the effects of hedging strategies, Zheng added.

Brokerage managers told Yicai Global that they also have started lending and self-buying securities. The absolute scale of the loaned securities is growing fast, though the relative size is still low and from the point of view of the securities lending structure, the concentration is high.

With the development of the market-making business, the acceptance of securities lending will increase, further promoting market-making, they added.

Some shareholders of listed companies have become more willing to lend securities recently, with those listed on the Star Market mainly being concerned about whether the market maker system can enhance liquidity and active trading of their stocks.

The Star Market’s stock market-making business was officially launched on Oct. 31. In the 23 trading days from then to Nov. 30, the first group of 42 underlying stocks had an average daily turnover of 5.3 million shares, up about 14 percent from the previous trading month. Over 60 percent of the underlying stocks' turnover exceeded that of the prior period.

The business is gradually expanding, with the number of market makers increasing by one to 15 since it launched. The underlying stocks jumped to 62 from 42. Some brokerages may target the expansion of specific stocks, according to industry insiders.

Editors: Shi Yi, Martin Kadiev