Brokers face clampdown
30 March 2006
Five brokerages are to have their trading rights restricted as punishment for misusing client funds intended for government bond purchases, the China Securities and Regulatory Commission has announced. In a move described by officials as 'killing the chicken to scare the monkey', the brokerages will only be allowed to make trades for existing clients. Proprietary trading, the opening of new accounts or any kind of business expansion is prohibited. The firms in question are Zhejiang-based Tianhe Securities, Cifco Securities in Jiangsu, Capital-Bridge Securities in Shaanxi, Aviation Securities in Beijing and China Lion Securities in Shenzhen. The CSRC has axed 20 brokerages in the last 18 months and further closures are expected.