CHINA’S securities regulator is investigating CITIC Securities Co., Haitong Securities Co. and Guosen Securities Co. over alleged breaches of rules on margin and short-selling contracts.

    The China Securities Regulatory Commission probes involve contracts the three brokerages signed with clients on margin finances and short-selling, according to exchange filings by the companies yesterday.

    The firms said their operations will remain normal and they will cooperate with the regulator.

    After a US$5 trillion stock market rout began in mid-June, the government has 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.

    The crackdown since the sell-off has ensnared executives and regulators. The Securities Association of China on Friday banned brokerages from entering into new client contracts that use derivatives to provide financing in stock trading.

    (SD-Agencies)