The Securities Association of China told brokerages not to provide finance based on over-the-counter equity pledges, Reuters reported June 1, citing two people with direct knowledge of the matter.
The association, which is supervised by the China Securities Regulatory Commission, warned brokerages, their subsidiaries and any asset plans they manage against stock-backed lending which is seen as risky, the report said.
Existing OTC equity pledge repurchase operations are exempted from the rule.
The move comes as China seeks to reduce risk in its financial system.
The securities association did not reply to requests for comment from Reuters.
