Chinese authorities have declared all "margin ads" online as illegal and ordered their immediate removal. This latest move is just one of the series of actions that the Chinese government is employing to arrest the further decline of the country's stock market. 

"Margin ads" entice online users to buy stocks using borrowed money. 

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Xinhua reported that China's Cyberspace Administration (CAC) sent instructions to Internet companies to remove all online ads that promote the illegal trade in securities through margin investing.

Many Chinese websites, social media outlets, and even online message services are filled with advertisements that have been attracting people with promises of providing loans to purchase stocks in the Chinese market. The ads also seeks to convince people to increase their stock purchases through the use of more than one account, according to the Global Post.

CAC reiterated that such security practices are considered illegal by the government. The internet regulatory body also found out that many companies that post such advertisements reportedly misrepresent themselves to victimize innocent investors. Such misrepresentations have placed the country's stock trading in a bad light.

The use of margin debt to purchase stocks has contributed greatly to the meteoric rise of the Chinese stock market. However, it is also seen as one of the culprits that triggered the massive unloading of stocks when prices began to fall.

Chinese authorities say they have collected evidence against companies that have allegedly engaged in the illegal manipulation of share prices. However, no company has publicly been charged as of the moment.

Bloomberg Business reported that around $264 billion worth of Chinese stocks were obtained through margin debt. Securities experts estimate that the amount of margin financing in China's stock market is virtually 100 percent bigger than the New York Stock Exchange, taking into account the difference in their composition and size.

UBS Securities analyst Lu Wenjie has shared his perspective on the position that Chinese securities regulators find themselves in. He said that launching a crackdown against margin debts may cause a catastrophic blow to the Chinese stock markets. The government is also well aware that 9 out of 10 securities transactions are made by small-time investors.

Tagschinese cyberspace administration, China stock market, China Stock Price Manipulation, China Margin Trading, China Margin Debt, China Margin Financing