Chinese Brokers Punished for Margin Violations

China's regulators are cracking down on violations of margin rules after brokers flooded the market with credit.

SCMP: China's securities watchdog disciplines six more brokerages for violating margin trading rules

Great Wall had broken regulations including selling products to unqualified investors, distributing trust products containing multiple types of trusts, and facilitating clients' provision of financing to other individuals, CSRC spokesman Zhang Xiaojun said on Friday.

He said Great Wall's irregularities were relatively more severe, and it would be banned from opening new margin trading accounts for three months.

Zhang said Huatai Securities needed to rectify its processes and strengthen oversight after it sold products to unqualified and higher-risk clients, while Guosen Securities should increase internal compliance checks after providing financing to unqualified clients.

The other brokerages sanctioned included Minmetal Securities, Huaxi Securities and China International Capital.

The outstanding balance of margin debt on the Shanghai Stock Exchange surpassed the trillion-yuan mark for the first time on Wednesday, a nearly fourfold jump from just 12 months ago.