Lombard loans in China.
Private, securities-backed credit against China-listed shares — pledged, not sold, with ownership retained.
A Lombard loan against China-listed shares is credit secured by a pledge of equity listed on the SSE, SZSE. The holder pledges the shares as collateral, draws cash against a fraction of their market value, keeps beneficial ownership and dividends subject to structuring, and recovers the position in full on repayment. It is a loan against shares rather than a sale of them — the Geneva private-banking form of what is elsewhere called a share-backed loan.
- Lombard loans are arranged against shares listed on the SSE, SZSE (SSE / SZSE).
- The pledge is not a sale: ownership, dividends, and the upside stay with the holder.
- Loan-to-value is calibrated to the specific position, funded in CNY or cross-currency.
- Structured under the CSRC regime, with disclosure from 5%.
Eligible collateral and venues
Lombard Financing arranges facilities against equity listed on the principal China venues: Shanghai Stock Exchange (SSE); Shenzhen Stock Exchange (SZSE). Eligibility at the position level turns on the liquidity and free float of the specific line, its volatility, and the size of the holding relative to its typical traded volume — the same variables that drive the loan-to-value.
Regulator and disclosure
Shares listed in China are regulated by China Securities Regulatory Commission (CSRC). Substantial-shareholding disclosure is triggered from 5%, and a pledge over a large line is structured with that reporting regime in view so that the transaction remains discreet and compliant. Where a holding sits near a control or takeover threshold, the structure is arranged to avoid disturbing the position.
Funding, custody, and structuring
Facilities are typically arranged for a tenor of twelve to thirty-six months, funded in CNY or in another currency on a cross-currency basis. Throughout the facility the pledged shares are held by a qualified custodian under bankruptcy-remote arrangements, so the security is clean and the holder’s ownership is preserved. Non-recourse, limited-recourse, and full-recourse structures are available, and the choice interacts with the loan-to-value and the pricing. One distinction is worth drawing at the outset: this is not a stock loan in the securities-lending sense, where title passes to a borrower who may on-lend or short the line. Here the shares are pledged and remain the holder’s throughout, as the comparison of Lombard, margin, and stock-loan structures sets out.
| Listing venue(s) | Shanghai Stock Exchange (SSE); Shenzhen Stock Exchange (SZSE) |
|---|---|
| Regulator | China Securities Regulatory Commission (CSRC) |
| Currency | CNY (cross-currency available) |
| Disclosure threshold | From 5% substantial-holding disclosure |
| Principal indices | SSE Composite, SSE 50, STAR 50; SZSE Component Index, ChiNext Price Index |
| Indicative tenor | 12–36 months, renewable by agreement |
| Recourse | Non-recourse / limited-recourse / full-recourse |
Detail by listing venue
Each venue has a page of its own, setting out how securities-backed credit is arranged against shares admitted there — the disclosure regime, the settlement and custody chain, the eligible segments, and the currency in which a loan against shares is normally drawn.
- Lombard loans against SSE-listed shares — Shanghai Stock Exchange, Shanghai. CSRC-regulated, with disclosure from 5%; indices SSE Composite, SSE 50, STAR 50.
- Lombard loans against SZSE-listed shares — Shenzhen Stock Exchange, Shenzhen. CSRC-regulated, with disclosure from 5%; indices SZSE Component Index, ChiNext Price Index.
Considering a Lombard loan against a China-listed position?
Request terms →The listing venues in China.
SSE
Shanghai Stock Exchange — Shanghai. Regulator: CSRC.
SSE Lombard loans →SZSE
Shenzhen Stock Exchange — Shenzhen. Regulator: CSRC.
SZSE Lombard loans →Lombard loans across Asia-Pacific.
On this market, specifically.
The market and its listed universe
Mainland China lists more than five thousand A-share companies across three venues. Shanghai carries the Main Board and the registration-based STAR Market; Shenzhen carries its Main Board, merged with the former SME board in 2021, and ChiNext; and the Beijing Stock Exchange, created in 2021, serves innovative smaller issuers. CSI 300, SSE 50, the SSE Composite, the SZSE Component Index, the ChiNext Index and STAR 50 are the reference points. Two features shape any financing. Ownership is highly concentrated, with SASAC-supervised state parents controlling much of the large-cap tier and identifiable founder-controllers behind most ChiNext and STAR issuers, portions of whose stock may still sit under lock-up. And turnover is retail-driven to a degree unmatched in the region, which makes single-name liquidity unusually sentiment-sensitive.
Who borrows against listed shares here
The archetypal borrower here is the founder-controller of a ChiNext or STAR issuer holding a decisive personal stake, frequently through a family holding company. Alongside sit SASAC-supervised state parents, provincial state investment platforms, and venture and private-equity sponsors emerging from lock-up. Pledging is deeply embedded in this market for a specific reason: rules restricting reduction of holdings by controlling shareholders — tightened again in recent years, including for issuers trading below issue price or below net assets — make outright selling slow, visible and sometimes simply unavailable. Share-backed financing becomes the practical route to funding an unlisted business or a group’s working capital. The 2018 episode remains the standing lesson in what over-pledging into a falling market does.
Disclosure and regulation
Mainland China discloses substantial holdings under Article 63 of the PRC Securities Law: a holder crossing 5% files, refiles on every further 5% band, and observes a short trading freeze in the days following disclosure — a timing point that matters where a Lombard facility might one day need to enforce. The CSRC supervises. The larger structural fact is access: direct A-share ownership by non-residents is restricted, so most international portfolios reach these shares through Stock Connect or the QFII / RQFII channels. We shape any Lombard credit around the access route the client already holds, since that route governs custody, enforcement and repatriation.
The legal form of the security
Security over mainland shares runs through the security-interest provisions of the PRC Civil Code, in force since January 2021, which replaced the former Property Law and Guarantee Law. A pledge of rights over listed equity is created on registration with the depository. Onshore this supports a large intermediated market in exchange-traded stock pledge repo, which the exchanges and the industry association tightened materially after the 2018 unwinding exposed how far controlling shareholders had pledged. Enforcement is court or arbitration led, with realisation by agreed sale or auction rather than self-help, and the Civil Code restricts a pledgee simply keeping the collateral. For a foreign lender the harder question — strictly one for PRC counsel — is what it could lawfully take title to at all.
Custody and how security is taken
A-shares are registered and settled by China Securities Depository and Clearing Corporation, ChinaClear, and the model is directly held: each investor has a real-name securities account at the depository rather than an entitlement traced through layers of nominee. Securities settle same day with cash following. That direct structure also carries the security interest. Under the PRC Civil Code a pledge over shares registered with a securities depository is created when the pledge itself is registered with that depository, so a charge over A-shares is a ChinaClear registration rather than a private contract alone — and aggregate pledge levels are published by the exchanges. Northbound Stock Connect lines sit behind an HKSCC nominee and follow an entirely different chain.
Currency and cross-border considerations
The renminbi is not freely convertible on the capital account. Onshore CNY trades within a band around a daily central parity while offshore CNH trades freely in Hong Kong and elsewhere; the State Administration of Foreign Exchange administers the perimeter. Non-resident access to A-shares runs through Northbound Stock Connect or the Qualified Foreign Investor scheme, which merged the former QFII and RQFII regimes in 2020 after quotas were removed, and each route carries its own conversion and repatriation mechanics. Where onshore assets secure an offshore loan, the cross-border security rules administered by SAFE — the nei bao wai dai framework — are generally understood to require registration and to constrain how proceeds may be used. Confirm the current position with PRC counsel before committing.
Tax questions to put to your adviser
Securities transaction stamp duty is charged on the seller side of an A-share sale and was reduced in August 2023 as a market-support measure. The questions for a tax adviser are whether creating or releasing a pledge is a transfer for those purposes at all, and what an enforcement sale would attract. For a non-resident holding through Stock Connect or the Qualified Foreign Investor scheme, ask about withholding on dividends, about the treatment of capital gains under the exemptions that have been repeatedly extended for those channels, and about treaty access. Where state-held shares or a listed company’s controlling shareholder are involved, the adviser should also be asked what approvals accompany a pledge.
General information only — not tax advice. Treatment turns on your own circumstances and residence, and on law that changes.
An illustrative example
For illustration only: the founder of a ChiNext-listed manufacturer needs capital for an unlisted subsidiary. Selling is barely an option — the reduction-of-holdings rules on controlling shareholders limit both timing and volume, and any sale is disclosed. Onshore, the answer is usually an exchange-traded stock pledge repo arranged through a securities company, with the pledge registered at ChinaClear. Offshore, the structure depends entirely on the access route: a Connect or Qualified Foreign Investor position sits behind a different custody chain, and the security, the enforcement path and the repatriation mechanics all have to be settled with counsel before anything is committed.
Illustrative only — not an offer, a quotation, or a commitment to lend.