New | Chinese brokers punished over margin trading
China's securities regulator deals heavy blow to three major brokerages as they are banned them from opening new margin trading accounts for three months
The mainland's securities regulator dealt a heavy blow to three major brokerages yesterday, just one month after a nationwide probe, as it banned them from opening new margin trading accounts for three months.
Citic Securities, Haitong Securities and Guotai Junan Securities, among the most powerful brokerages in the country, were found to have illegally rolled over margin trading contracts for a large number of investors, the China Securities Regulatory Commission said.
CSRC spokesman Deng Ge said the three brokerages had been punished for their wrongdoings but they still failed to correct their mistakes.
The punishment reflected the regulator's determination to effectively police margin trading and short selling businesses following a strong market rally that began in September last year.
Margin trading, which allows investors to borrow cash from brokerages to buy shares, has soared since the second half of last year, with millions of investors betting on further gains on the stock market.
On the Shanghai Stock Exchange alone, outstanding borrowing for margin trading has reached 767 billion yuan (HK$960.5 billion), more than double the 284 billion yuan at the end of July, according to data released by the bourse.
