CHINA’S securities regulators are intensifying their scrutiny of share sales by insiders at listed companies, domestic media reported yesterday.

    China Securities Journal said that the China Securities Regulatory Commission (CSRC) has begun reviewing every instance of a share sale, in which a designated company insider managed to sell at the top of a price spike.

    The move addresses concerns that insiders have been abusing inside information to cash out of their positions at a profit at the expense of ordinary shareholders.

    The CSRC has made no official announcement to this effect, and the article did not specify the source for its information.

    The report follows a crackdown on the country’s largest three brokerages for improper margin trading.

    Much of the stock market rally, which has seen major indices gain as much as 50 percent in recent months, has been supported by the exuberant usage of leverage by the retail investors that conduct the majority of transactions on the Shanghai and Shenzhen stock exchanges.

    Some analysts fear that a loss of confidence could quickly turn to panic as ordinary investors bail out of shares, causing a sharp collapse in share prices as occurred in the aftermath of a similar rally in 2009, but this time the collapse would do greater damage given the amount of debt incurred by speculators in the run-up.

    Stock investors have proven highly sensitive to signs that the government is going to suppress the rally by tightening up on the supply of credit, with a sequence of crackdowns on margin finance and other fundraising forms setting off a sharp one-day collapse last week.

    The markets only recovered after securities regulators said that they did not intend to suppress the rally.

    (SD-Agencies)