Even before noon Monday, trading in China’s biggest stockbrokers was halted in Shanghai because their own stocks had crashed by the daily limit of 10%.

That’s the kind of day it was in China’s stock markets—or casinos, depending on your persuasion.

The Shanghai index plummeted by 7.7% on Monday, its biggest daily drop in over six years, following the China Securities Regulatory Commission’s announcement Friday that three large brokerages—including Citic Securities Co. CIIHF and Haitong Securities—were suspended from extending margin accounts to new clients for three months. The three had violated regulations by rolling over margin loans, allowing customers to keep leveraged bets in place for more than the permitted six months.

The regulator also punished nine different brokerages for allowing unqualified traders to open leveraged accounts, Xinhua reported, which allow investors to borrow funds from their brokers to increase the size of their equity bets—sometimes by ratios of five-to-one.

Loans for margin buying have almost tripled since the summer, reaching $170 billion by last week. Reports have said brokerages were lending to investors with just 50,000 yuan ($8,040) in their accounts, instead of the mandated 500,000. The government appears to be stepping in to slow down enthusiasm for stocks, which we have previously documented has gone into overdrive of late.

That the government plays a large role in China’s stock markets is a given. Shanghai’s 60% market rally since last summer could be timed, almost to the day, to when the state-run press began touting undervalued stocks to individual Chinese investors.

Volatility like Monday’s rout has tracked the various government edicts, Fraser Howie, author of “Red Capitalism”, has observed. Moreover, the Shanghai market is dominated by state-owned firms, which allow only a small portion of their equity to be traded. The government holds the majority. That means stock market forces like mergers and acquisitions or takeovers are off the table, which gives greater influence to news like Monday’s.

When the government says ‘buy,’ Chinese investors have obliged them. When the government says ‘slow down,’ well, stocks dive.