Beijing:-Chinese authorities have launched a fresh crackdown on financial market malpractice, putting five of the country’s top brokerages under investigation amid the steepest slide in domestic stock markets in almost two decades.

Haitong Securities, GF Securities, Huatai Securities and Founder Securities all issued statements confirming that they are being probed by the China Securities Regulatory Commission for “failure to review and verify the identity of clients in accordance with rules”.

Haitong said that it would “fully cooperate” with the regulator and that its business was continuing to operate normally in a statement to the Hong Kong bourse.

In a separate investigation, eight people connected to Citic Securities, the country’s largest broker, are being probed by Chinese police for “illegal securities trading”, according to Chinese state news agency Xinhua, along with people linked to the CSRC itself.

Citic said it had “not received any notification” on the investigation. “We are in the process of gathering more information on this matter,” the company added.

Shares in the four companies listed in Hong Kong saw mixed trading on Wednesday, with Citic falling 2.3 per cent while GF Securities gained 4.7 per cent. Founder, which is listed only in Shanghai, sank 4.3 per cent, having been up earlier in the day.

China’s financial market regulator has been at the forefront of Beijing’s efforts to halt a dramatic slide in domestic share prices. After hitting a seven-year high in mid-June, the Shanghai stock index has dropped more than 40 per cent, erasing all this year’s gains.

This week the sell-off has gathered pace, with the Shanghai Composite suffering its steepest two-day drop since 1996, in spite of measures over the past month aimed at steadying the market.

The People’s Bank of China cut interest rates again on Tuesday evening, the second such move in the past two months and the fifth since November.

The latest regulatory and police probes follow steps in June to tackle “malicious short selling” and market manipulation linked to the rapid decline in Chinese stock prices.

One of the most drastic supportive measures is a ban on stake sales by major shareholders and company executives.

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In the weeks since its introduction, the CSRC has launched investigations into dozens of companies for allegedly skirting the new rules.

The CSRC has also warned media about spreading false information and turned its attentions to high-frequency traders in recent weeks, part of a broad effort to soothe fears within financial markets over possible price manipulation.

Earlier this year, the CSRC barred a number of brokers from opening new margin trading accounts for a period of three months, following a probe into high-risk lending.

Margin finance — the use of borrowed money to trade shares — was a key driving force behind the stock market rally in Chinese over the past year. Many analysts see the government’s attempts to crack down on it as one of the main triggers for the sell-off.