ON Tuesday, China's securities watchdog came out with a damning report attacking the Shanghai stock exchange for breaking trading rules by allowing the non-tradable bonus shares of a company to be traded. On Monday, it took away the trading licence of Guangdong Jinchuang Futures Brokerage for manipulation of long rice futures. Last Wednesday, it stunned the industry by enforcing a six-month closure of Changchun United Commodity Exchange in Jilin province for dereliction of duty. Is the China Securities Regulatory Commission (CSRC) finally showing its teeth? 'We're definitely seeing a more aggressive commission now,' said futures broker Nie Junxiang of Shanghai Oriental Futures. The hands-on approach - which has become more apparent in the past few months - began this March with the appointment of Zhou Daojiong as chairman of the CSRC, replacing Liu Hongru. Whereas the CSRC used to focus on rapidly expanding the securities market - reckless expansion, maybe - it now calls for stable growth and standardisation. When the Shanghai exchange officially opened in December 1990, there were only eight listed companies with average turnover of six million yuan. Today, there are about 180 companies, whose daily turnover easily exceeds one billion yuan. But rapid expansion without a sound regulatory and supervisory system gave rise to a myriad of problems, for which Mr Liu paid a price. 'Although he played a big role in expanding the securities markets, his failure to control malpractices caused his downfall,' said a foreign broker. Mr Zhou was asked to step into his shoes. On June 20, in his first major policy speech after taking over as chairman, the former banker made it clear that the days of blind pursuit of rapid expansion were over. His tasks were to strengthen regulation of the securities and futures market, standardise market behaviour, and consolidate what had been achieved. 'Those are not easy tasks because in China, as you know, there are too many political connections to deal with,' said the foreign broker. The most tricky problem Mr Zhou inherited was the investigation into the treasury bond futures scandal, which took place in late February involving the country's biggest brokerage. Another scandal broke out in May, which triggered an indefinite suspension of the bond futures market. Investigations into the scandals were protracted and delicate. That was particularly true of the one which broke out in February, since it reportedly involved some 'princelings' - children of senior officials - who traded through Shanghai International Securities (SISCO), the brokerage at the heart of the probe. But the findings publicly released in late September were a great disappointment. The commission did not explain in detail what went wrong. It merely said SISCO was guilty of price-rigging, the Shanghai exchange failed to exercise control, and the key people of SISCO and the exchange would be removed. There was no proper explanation. But some commission supporters said it was a landmark that it was able to come out with something after the investigation. 'The investigation may not have said a lot of things which people didn't already know, but it was something in that it said something,' said the deputy general manager of a brokerage. In the report, the Shanghai exchange was severely reprimanded. This was not the last time. On Tuesday, the commission reprimanded the Shanghai exchange for allowing the illegal listing of non-tradable bonus shares by Sichuan Changhong Electrical in late August. Under Chinese regulations, bonus shares issued to legal persons shareholders are not allowed to be listed. Its mishandling of the two incidents has led the CSRC to clip its wings and show who was boss. The commission has also begun to make its presence felt in the futures industry. In an unprecedented move, the Changchun United Commodity Exchange was last week ordered to shut for six months until it put its house in order. It had failed to check irregularities among members in corn futures trading. Individual brokerages which broke rules were also punished, such as the Guangdong Jinchuang Futures, whose licence was revoked for violating rules in long rice futures. Will the flexing of its muscle lead to a better-regulated securities market? 'It will surely force many to sit up. But, in the final analysis, China will have to produce quickly its Securities Law to provide a proper legal framework for the development of sound market,' said the foreign broker. He said there was a need to give the commission full power to regulate the industry, without interference from the political powers.