February 25, 2019 / 3:10 PM / 8 months ago

China regulator urges stricter monitoring of unusual stock trading

A woman looks at monitors showing stock information at a brokerage house in Jiujiang, Jiangxi province, China June 19, 2018. REUTERS/Stringer

SHANGHAI (Reuters) - China’s stock market regulator on Monday urged securities firms to review how suitable trades are for their clients and to better monitor abnormal trades.

It made the comments after reports of increasing grey-market margin financing — investors borrowing money outside China’s brokerage system to buy stocks. Such financing fueled a bull run in stocks that ended in the Chinese market’s crash in 2015.

In a statement posted on its website, the China Securities Regulatory Commission also cautioned investors against investment risks and urged them to be rational amid a stock market rally.  

Chinese stocks posted their biggest single-day gains in more than three years on Monday after U.S. President Donald Trump said he would delay an increase in tariffs on Chinese goods thanks to “productive” trade talks. The Shanghai Composite Index has risen over 18 percent so far this year.

Reporting by Samuel Shen

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