Regulators in China are cracking down on illegal share-backed financing activities as outstanding margin debt climbs to worrying levels.

The China Securities and Regulatory Commission (CSRC) exposed 258 funding platforms allegedly involved with illegal «undercover margin lending» without a brokerage license.

According to a CSRC statement, the regulator urged investors to actively avoid such illegal funding platforms and to report to authorities when they fall victim to related crimes.

Margin Debt Fears

Since May this year, the CSRC has highlighted illegal funding platforms as an area of focus, underlining their marketing methods of cold calling and social media advertising. This has led onlookers to cite fears about increasing margin debt, a widely cited contributor to the 2015 bubble that also led to accelerated downturns as share-backed loans were unwound.

Outstanding debt currently totals 1.27 trillion yuan ($181 billion), the highest since the stock market crash in 2015.