China reviews changes to securities law to fight illegal activity: Xinhua

Investors look at an electronic board showing stock information on the first trading day after the New Year holiday at a brokerage house in Shanghai, China, January 3, 2017. REUTERS/Aly Song

SHANGHAI (Reuters) - Amendments to China’s securities law aimed at combating illegal trading activity have reached their second reading in parliament, the official Xinhua news agency reported late on Monday.

Xinhua said the new draft law would tighten rules preventing insider trading, ban traders from using other people’s accounts to make transactions, and better protect the interests of investors.

The amendments come in the wake of lessons learned in 2015, when regulators were forced to intervene to try to halt a market crash, with shares on the Shanghai stock exchange plunging by a third.

China subsequently blamed the crash on market manipulation, and the country’s corruption watchdog has also accused officials with the China Securities Regulatory Commission (CSRC) of irregularities.

The country’s stock exchanges have also improved supervision and are closely monitoring money flows under the connect schemes with Hong Kong to spot unusual trading behaviors.

Reporting by David Stanway; Editing by Jacqueline Wong