SHANGHAI, August 31. (Reuters) – China Securities Regulatory Authority has tightened control over margin lending and securities borrowing brokerages following recent misconduct, the official China Securities Journal reported Tuesday.
The China Securities Regulatory Commission (CSRC) has called on brokerage firms to strengthen monitoring of trading activity on investors’ credit accounts to prevent the misuse of margin loans, the newspaper said, citing the CSRC notice.
Some investors have recently bypassed the rules by using margin loans to buy ineligible assets, converting them into cash, or using them for other illegal financing, the newspaper said.
The article states that such activities violate rules, disrupt trading mechanisms, increase the likelihood of spreading risks, and make it difficult for brokers and regulators to identify risks.
CSRC warns against converting margin lending into a lending business with no restrictions on use, the newspaper writes.
China’s outstanding margin loans this week hit a six-year high of 1.87 trillion yuan ($ 289.21 billion).
On Monday, the CSRC pledged to crack down on inefficiently managed private funds and weed out phony funds as regulators tighten the screws on the capital market. ($ 1 = RMB 6.4658) (Reporting by Samuel Shen and Andrew Galbraith; editing by Kim Coghill)