CHINA'S securities and futures regulators have ordered futures brokerages to clean up their internal finances and weed out trading irregularities after persistent complaints of abuses. The China Securities Regulatory Commission (CSRC) has given brokerages 30 days to carry out an inspection of internal operations, a report of which should be submitted to the local futures watchdogs. The CSRC said there were serious problems, such as lax management and financial disorder in futures brokerages, disregard for professional standards, inadequate control of risks and frequent litigation because of disputes. In a directive publicised yesterday, the CSRC ordered the brokerages to set up routine internal reporting and accountability systems to provide checks and balances against fraudulent practices. Brokerages must not raise funds or provide overdrafts for their clients. Trading orders must be signed by clients and phone orders should be recorded to prevent abuses by brokers. The move marks a continuing attempt by Beijing to step up surveillance of the scandal-ridden industry. Although the crackdown, which started in mid-1994, has brought a measure of order to the industry, it has not stopped some brokerages from flouting regulations. Abuses have included using clients' deposits for proprietary trading, lax management control, messy finances, irregular trading practices, weak risk control and poor supervision. The CSRC has asked local regulators to take a more active role in supervising the brokerages. Regulators should require brokerages to submit financial reports for the first nine months of the year by end October. If they uncover any improper or fraudulent practices, they should immediately inform law enforcement departments. In the last year, lax control and outright abuses have triggered excessive speculation in futures for commodities such as plywood, green beans, red beans and long rice grains. The most famous futures scandal took place last year when a handful of securities and futures brokerages tried rigging prices of treasury bond futures. The scam ended in the indefinite suspension of bond futures and severe penalties for those involved. Worse, this and other scandals have led to a re-thinking of the role of the futures industry and a possible merger of the existing 15 futures exchanges. Futures analyst Nie Junxiang said: 'As far as the central authorities are concerned, the scandal-rocked futures industry is a low priority.' The initial clampdown led to a merger of about 40 exchanges into 15. Industry sources said a continuing crackdown had clipped the industry and the survival of many exchanges were at stake. There is widespread talk that only four or five exchanges would survive the continuing tightening, which suits Beijing's aim. There is much overlap in the futures traded by existing exchanges, which makes trading highly fragmented. A Shanghai Oriental Futures analyst said: 'We have heard about the possibility of paring down the number of exchanges to four or five, but no one knows when that will take place.'