CSRC goes digital to track rat traders

The mainland's securities regulator has fallen for digital technology in a big way, with big data - the collection of large and complex data sets - giving its crackdown on "rat traders" a much-needed shot in the arm.

A China Securities Regulatory Commission investigator said hundreds of asset managers at mutual fund houses and brokerages had been targeted in the latest round of the crackdown, thanks to the analysis of digitised trading information.

The problem of rat traders - asset managers who use inside information to trade through the accounts of relatives or friends - is believed to be rampant in the stock market.

They normally use the tactic of "churning" - engaging in excessive trading - to ensure they can earn money.

In a typical case, a rat trader would buy shares of a particular company just before a multimillion-yuan fund increases its holding in the firm, which would usually cause the share price to rise. The rat account would then cash out and lock up the gain.

Before last year, millions of retail investors had criticised the CSRC for its reluctance to deal a heavy blow to unscrupulous fund managers.