Foreign-listed Chinese ETF's plunge after government announcement.

After Chinese markets closed on Friday, the government announced a crackdown on over-the-counter margin financing and certain wealth management products.

Trust companies have been a growing, and perhaps the largest, source of margin financing. In particular, instruments known as umbrella trusts.

The iShares China large cap ETF -- FXI -- is down nearly 5%. The Chinese market has seen a flood of retail activity with reports that 6 million stock accounts were opened in the past month, which is almost the same amount that were opened in all of 2014.

Other popular China ETFs:

  • MCHI -4%
  • HAO -3.8%
  • EWH -2.2%

Traders will be watching closely when Chinese markets re-open on Monday.