Shanghai: China said it is cracking down on thousands of stock accounts linked to illegal trading, in its latest bid to restore order to markets pummelled by a rout that has wiped trillions off valuations in the country since June.

The China Securities Regulatory Commission (CSRC) has so far targeted 3,255 accounts, shutting some and forcing others to trade through legal channels, it said in a statement late Monday.

The violations included investors failing to register real names on their accounts, and using platforms that facilitated margin trading outside regulators’ oversight, it said.

Margin trading allows investors to use borrowed funds to trade stocks with only a small portion of money as deposit.

China’s benchmark Shanghai stock index has plummeted around 40 percent since hitting a June 12 peak, prompting leaders to launch an unprecedented rescue package including the buying of equities by government-backed entities.

The regulatory crackdown began in July and the CSRC still has to check more than 2,000 accounts holding nearly 188 billion yuan ($29 billion) worth of shares, according to the statement.

Chinese stocks fell on Monday and Tuesday owing to news of the crackdown, analysts said, though the CSRC played down the impact. 

‘It will not have an obvious impact on the market,’ it claimed.

The CSRC earlier this month fined three companies a combined 453 million yuan ($71 million) for conducting ‘illegal securities business’, which has been blamed for volatility on the plunging markets.

Police have detained Wang Xiaolu, a journalist with the respected business magazine Caijing, after he wrote a story in July saying the regulator was studying plans for government funds to exit the market.

Authorities have also detained an official from the CSRC and four senior executives of Citic Securities, the country’s biggest brokerage by assets, for ‘stock market violations’, the official news agency Xinhua reported last month.

The CSRC and police earlier announced a joint campaign against what authorities call ‘malicious’ short-selling, essentially a bet stock prices will go lower.