SHANGHAI, Aug 31 (Reuters) - China’s securities regulator has strengthened scrutiny of brokerages’ margin lending and securities borrowing businesses, after detecting misbehaviour recently, the official China Securities Journal reported on Tuesday. The China Securities Regulatory Commission (CSRC) has urged brokerages to step up monitoring of trading activity in investors’ credit accounts to prevent the misuse of margin loans, the newspaper said, citing a CSRC notice. Some investors have recently circumvented rules, using margin loans to buy ineligible assets, converting them into cash, or using them for other illegitimate financing, the newspaper said. Such activities flout regulations, disrupt trading mechanisms, increase the chance of risk contagion, and make it harder for brokerages and regulators to identify risks, the article said. CSRC warned against turning margin lending into a loan business with no usage restrictions, the newspaper said. China’s outstanding margin loans hit a six-year high of 1.87 trillion yuan ($289.21 billion) this week. On Monday, CSRC pledged to crack down on mismanaged private funds and weed out fake ones, as regulators tighten the screws on the capital market. ($1 = 6.4658 Chinese yuan renminbi) (Reporting by Samuel Shen and Andrew Galbraith; Editing by Kim Coghill) Our Standards: The Thomson Reuters Trust Principles.