China will soon allow individual investors to open no more than three accounts for Shanghai-listed shares following the detection of a growing number of fake registrations in recent months.

The China Securities Regulatory Commission (CSRC) is expected to announce the new rule after the upcoming Mid-Autumn Festival, according to a source close to the securities watchdog. Individuals who had more than three accounts prior to the new ruling will not be affected, the source said.

China Securities Depository and Clearing Corp Ltd (CSDC) -- a subsidiary of CSRC that settles all transactions in the A-share market -- lifted a 17-year-old ban in April last year, allowing individual investors to open up to 20 securities trading accounts simultaneously to trade in Shanghai-listed shares. Previously, an individual investor was permitted to have one only account at a time. The relaxation facilitated those who wish to have separate securities accounts in various securities firms.

However, the securities regulator found recently that a number of new registrations are likely to be false after a few securities firms began heavy marketing activities to encourage investors to open securities accounts.

"Many correspondence addresses used for newly opened accounts in a securities firm were found to be the same," according to the source.

CSDC data suggest that newly opened securities accounts on the Chinese mainland exceeded two million in August amid a lukewarm stock market performance during the month.