Official Chinese media reported on Monday that Hong Kong-based Guotai Junan International had suspended the opening of accounts by mainland clients, triggering fear of a total ban on such a business.

The China Securities Regulatory Commission (CSRC) admitted that it had recently launched a campaign to clean up illegal cross-border activities by Chinese brokerages, but said existing clients would not be affected.

"The core principle is to ban those offshore institutions without a license in China from soliciting, and opening new accounts for onshore investors," the CSRC said.

"Meanwhile, existing clients are still allowed to trade via those offshore institutions, but fresh money inflows into those accounts must strictly abide by China's foreign currency management rules."

The CSRC added that some media reports are "not objective, and not factual."

Mainland Chinese can buy overseas securities via official channels such as outbound investment scheme QDII, and cross-border programme the Stock Connect.

    However, many Chinese open stock trading accounts in Hong Kong, potentially bypassing China's strict capital control.

On Dec. 30, the CSRC said online brokerages Futu Holding and UP Fintech Holding violated Chinese rules and banned them from soliciting mainland investors.

The CSRC said on Wednesday that most brokerages with such businesses are actively making corrective measures, and have already stopped opening new accounts.

The CSRC added it would strengthen cooperation with onshore and offshore regulatory bodies to ensure smooth implementation of the clean-up without disrupting markets.

Hong Kong-based Bright Smart Securities said this week it would suspend accounts of mainland Chinese clients starting Feb. 16, as it awaits clarification from Chinese regulators.

(Reporting by Ella Cao and Meg Shen; Editing by Toby Chopra)