Shanghai: China’s securities regulator is investigating Citic Securities Co and Haitong Securities Co over alleged breaches of rules on signing client contracts.
The probes by China Securities Regulatory Commission are into contracts the nation’s two largest brokerages signed with clients on margin finances and short-selling, according to exchange filings by the companies in Shanghai Sunday. The firms said their operations will remain normal and they will cooperate with the regulator.
Shares of Chinese brokerages led a decline in China stocks on Friday, with Citic down by the 10 per cent daily limit. Haitong shares dropped 3.8 per cent before trading was suspended in Hong Kong. Both companies said they received notices from the CSRC on November 26 about the probes. Guosen Securities Co also said it was being investigated by the regulator.
The Chinese government has stepped up its clampdown on malpractice in the securities industry after a $5 trillion stock-market rout this summer. The crackdown since the sell-off has ensnared executives and regulators. The Securities Association of China on Friday banned brokerages from entering into new client contracts that use derivatives to provide financing in stock trading.
Citic President Cheng Boming was held for alleged insider trading and leaking information, the state-run Xinhua News Agency reported in September.