CSRC may limit se­cu­ri­ties ac­counts

Spec­u­la­tors re­port­edly use fake names for mar­gin trad­ing

China Daily (USA) - - BUSINESS - By LI TAOin Hong Kong litao@chi­nadai­lyhk.com

China will soon al­low in­di­vid­ual in­vestors to open no more than three stock trad­ing ac­counts for Shang­hai-listed shares, after de­tect­ing grow­ing new ac­counts with fake iden­ti­ties in re­cent months, ac­cord­ing to well-con­nected in­dus­try sources.

The China Se­cu­ri­ties Reg­u­la­tory Com­mis­sion is ex­pected to an­nounce the rule change after the up­com­ing Mid-Au­tumn Fes­ti­val (Sept 15-17), said a source close to the se­cu­ri­ties watch­dog.

But, in­di­vid­u­als who have al­ready opened more than three ac­counts prior to the new rul­ing will not be af­fected, the source said.

The CSRC did not re­spond to a query sent by the China Daily on Tues­day.

China Se­cu­ri­ties De­pos­i­tory and Clear­ing Corp Ltd — a sub­sidiary of CSRC that set­tles all trans­ac­tions in the A-share mar­ket — lifted a 17-year-old ban in April last year, al­low­ing in­di­vid­ual in­vestors to open up to 20 se­cu­ri­ties trad­ing ac­counts si­mul­ta­ne­ously to trade in Shang­hai-listed shares.

Pre­vi­ously, an in­di­vid­ual in­vestor was per­mit­ted to have one only ac­count at a time. The re­lax­ation fa­cil­i­tated those who wish to have sep­a­rate se­cu­ri­ties ac­counts in var­i­ous se­cu­ri­ties firms.

How­ever, the Chi­nese se­cu­ri­ties reg­u­la­tor found re­cently that a num­ber of new reg­is­tra­tions are likely to be false after a few se­cu­ri­ties firms be­gan heavy mar­ket­ing ac­tiv­i­ties to en­cour­age in­vestors to open se­cu­ri­ties ac­counts.

“Many cor­re­spon­dence ad­dresses used for newly opened ac­counts in a se­cu­ri­ties firm were found to be the same,” ac­cord­ing to the source.

The new curb would take its toll on main­land’s bro­ker­age firms, putting them on course to brace for an el­e­vated com­pe­ti­tion vy­ing for clients and suf­fer from fur­ther re­duc­tion in com­mis­sions, said Han­nah Li Wai­han, a strate­gist at UOB Kay Hian Hong Kong, adding that it sends out a clear sig­nal that main­land’s se­cu­ri­ties reg­u­la­tor is look­ing to tighten its grip on mar­ket par­tic­i­pants.

“From the per­spec­tive of in­di­vid­ual in­vestors, the new rule could also deal a blow to mar­gin trad­ing. They are left with a lim­ited num­ber of bro­kers to bor­row money from for stock pur­chases,” Li told China Daily.

Mar­ket data sug­gested that newly opened se­cu­ri­ties ac­countson­theChi­ne­se­main­land ex­ceeded two mil­lion in Au­gust amid a luke­warm stock mar­ket per­for­mance dur­ing the month.

the num­ber of se­cu­ri­ties trad­ing ac­counts an in­di­vid­ual in­vestor now is al­lowed to open si­mul­ta­ne­ously to trade in Shang­hai-listed shares

Luo Weit­eng, Duan Ting and Li Xiang con­trib­uted to this story.

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