China's muddled regulatory battlefront against stock market 'monsters'

It was the kind of language that has rarely echoed from the corridors of regulatory power.

In a leaked video, Liu Shiyu, chairman of the China Securities Regulatory Commission (CSRC), lashed out at the backers of “improper” leveraged takeovers, calling them “barbarians”, “bandits”, “evil monsters” and “poisonous demons”.

While Liu did not name any firm, it was clear he was taking aim at a number of private companies using their insurance units to raise funds to launch takeover bids for blue-chip listed companies.

Those insurance funds have caused gyrations in the stock market, and Liu’s frustration with them reflects a longstanding flaw in the mainland’s financial regulatory system: the lack of a coordinated regulation over a quickly expanding industry that has ­already blurred the lines between banking, brokerages and insurance businesses.