China’s securities regulator instructed brokerages on Sunday to review trades and enforce rules that require the use of real names and national identification numbers, the latest move by the government aimed at stabilising stock prices following a devastating market rout the past month.
Chinese authorities have frantically tightened controls on trading while partly blaming illegal behaviour for the 30 percent drop that has wiped out trillions of dollars worth of market value in just three weeks.
The latest warning by the China Securities Regulatory Commission (CSRC) is meant to clamp down on a trick whereby a single investor controls multiple accounts — often registered under other people’s identification numbers — to bid the price of a stock up or down.
Regulators have recently unfurled a series of other measures, such as banning listed companies’ big shareholders from selling shares or limiting shorting activities in stocks and futures, while vowing to crack down on illegal trading activity with the help of China’s public security apparatus.
The official Xinhua news agency reported on Sunday that an investigation personally led by China’s vice minister of public security Meng Qingfeng found certain brokerages were suspected of manipulating futures prices and other “malicious” trading.
As indices tumbled in recent days, the government — whose political credibility has been yoked to a stock market it has talked up to China’s middle class — has portrayed upholding stock prices as a matter of patriotic duty.
Among the government’s other measures has been the arrangement of a curb on new share issues and the orchestration of brokerages and fund managers to promise to buy at least 120 billion yuan ($19 billion) of stocks with backing from the central bank.
The moves appeared to work by the end of last week, with the CSI300 index of the largest listed companies in Shanghai and Shenzhen racing higher to close up 6.4 percent on Friday, while the Shanghai Composite Index rose 5.8 percent.
By Gerry Shih. Reporting by Gerry Shih; Editing by Mark Potter