New | China’s regulator fines brokers, blames them for financing role in 2015 stock market rout
Three brokerage firms punished for illegally providing short selling services during China’s stock rout in June, 2015
China’s regulator has penalised three of the country’s largest brokers, blaming them for their role in the 2015 stock market crash, in the first official account of a rout that wiped out US$5 trillion of market value in a few weeks since mid June that year.
Leading mainland brokerages Citic Securities and Haitong Securities, together with smaller player Guosen Securities, were fined by the China Securities Regulatory Commission (CSRC) for breaking margin financing and securities lending rules in a case involving Citadel Securities, filings of the three companies said on Wednesday night.
Analysts have taken the penalty a final conclusion to a two-year investigation led by the CSRC, regarding the involvement of brokerage companies during the sharp stock market slump.
Citic Securities, China’s largest brokerage house, had broken rules on margin financing and its securities lending business by “failing to execute business contracts with its customers in accordance with the relevant provisions”, the investigation by the CSRC found, the filing said.
Specifically, Citic Securities provided credit account services to Citadel (Shanghai) Trading Company in breach of requirements that the company needed to have an active account open with the brokerage for at least six months, the filing said.
