China tightens trading curbs on domestic and foreign investors as stock rout deepens

SHANGHAI – China is tightening trading restrictions on domestic institutional investors as well as some offshore units as the authorities fight to stem a deepening stock rout, according to people familiar with the matter. Officials this week imposed caps on some brokerages' cross-border total return swaps with clients, limiting a channel that can be used by China-based investors to short Hong Kong stocks, said the people. At the same time, some Chinese brokers that use the channel to buy mainland shares for their offshore units were told not to reduce their positions, the people said. Some quantitative hedge funds meanwhile…