China’s securities regulator has moved to crack down on identity fraud and grey-market margin lending in the latest of a series of aggressive government measures to prevent the country’s stock markets from tumbling further.
The regulator warned brokerages last night to stop opening their trading systems to lightly regulated “fund-matching” companies that distribute loans for leveraged stock bets, flooding the market and amplifying the boom and bust cycle. Grey-market margin lending has provided as much as Rmb1tn ($160bn) in credit for leveraged stock bets.
“For some time, some institutions and individuals have employed information systems to open fictitious securities accounts for clients, using other people’s securities accounts or loaning out their own,” the China Securities Regulatory Commission said.