CHINA'S securities watchdog has slashed its ratings for 23 securities companies in an annual assessment as the regulator has stepped up its watchfulness for fraud in an effort to restore investors' confidence.

Among the demoted brokerages, Ping An Securities, Minsheng Securities and Nanjing Securities, which were all fined earlier this year for failing to perform due diligence when sponsoring initial public offerings, received the sharpest downgrades, underlining the regulator's resolve to take a hard line on misconducts of sponsors.

The China Securities Regulatory Commission cut its rating for Ping An Securities, the brokerage arm of Ping An Insurance, by six notches from A to C, the sharpest cut since the rating system was introduced in 2007.

Minsheng Securities and Nanjing Securities both fell five notches to C and CC, respectively, according to a statement on the CSRC's website.

Ping An Securities was banned from sponsoring IPOs for three months and was fined 76.65 million yuan (US$12.6 million) in May following a finding of negligence in the audit of Wanfu Biotechnology (Hunan) Agricultural Development Co's business operation and financial reports.

The broker was downgraded from AA to A in 2012 after an IPO it sponsored was halted due to problems with financial results.

Minsheng Securities and Nanjing Securities in May were fined for dereliction of duty in the IPOs of Guangdong Xindadi Biotechnology and TNS Solar.

The latest rating cut will increase the amount of funds Ping An should contribute for investor protection by 48 million yuan as China's securities law requires brokers rated C to pay 3 percent of their annual revenue for investor protection, but only 1 percent for brokers rated A.

Industry analysts said the rating cut would also limit the broker's ability to obtain licenses for new businesses.

A total of 21 securities houses were rated AA, the highest level in this year's assessment, up from last year's 15.