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China brokerages investigated over margin trading contracts

China investor stock prices
China Daily | Reuters

Chinese brokerages currently under scrutiny from the country's securities regulator are being investigated for suspected rule breaches related to the signing of margin trading contracts, they said in separate filings on Sunday.

Shares in Shanghai sank more than 5 percent on Friday, the biggest drop since the summer rout, after brokerages announced that they were under investigation by the China Securities Regulatory Commission.

China's biggest brokerage, CITIC Securities, said on Sunday that the investigation was looking into possible violations of rules on margin trading contracts with clients, adding that the company is operating normally during the probe.

Smaller rivals China Haitong Securities and Guosen Securities issued similar statements.

China Haitong Securities' statement on the Hong Kong Stock Exchange said it would continue to comply fully with its disclosure obligations.

After the stock market slump began in mid-June, Beijing launched a massive and unprecedented rescue effort and began cracking down on insider trading and short-selling, which it said were partly to blame for market volatility.

Haitong, along with Guotai Junan Securities, is also being probed by anti-corruption investigators, the official Xinhua news agency reported on Tuesday.