BEIJINGSHANGHAI, Feb 6 Reuters China39;s securities regulator said on Tuesday it would suspend brokerages from borrowing shares for lending and cap the size of socalled securities refinancing, as part of further efforts to curb shortselling.

The watchdog will also ban securities lending to investors who sell stocks on the same day of purchase, and vowed to crack down on illegal arbitrage using shortselling.

Chinese authorities have announced a raft of measures to support share prices after the market plunged to fiveyear lows last week in an ailing economy.

The fresh measures came a day after the China Securities Regulatory Commission CSRC vowed zero tolerance against malicious short sellers, warning those who dare flaunt the law will lose their shirts and rot in jail.

The CSRC said on Tuesday that no new business would be allowed for securities refinancing, in which brokerages borrow shares and lend them to clients for short selling. Existing businesses would be gradually wound up.

In addition, the watchdog urges brokerages to tighten scrutiny over clients39; trading behaviours.

Under China39;s regulations, shares cannot be sold on the same day of purchase, but some investors skirt the rules using borrowed shares. The CSRC said that such traders would be banned from borrowing shares.

Recent efforts to curb shortselling has led to a 24 drop in securities lending business, to 63.7 billion yuan, the CSRC said.

Reporting by Shanghai and Beijing newsroom; Editing by…