SHANGHAI, May 19 -- CHINA'S securities regulator has ordered fund managers to set upper limits on sales of their new listed open-end funds - the latest move to cool a booming capital market - an internal document showed yesterday.

The edict comes after the watchdog early this year demanded that money managers cap the size of non-listed open-end funds in their initial sales to curb operational risks.

Listed open-end funds are those that pool clients' capital periodically and help them invest in securities. But unlike common open-end products, LOFs are also traded on the exchanges like stocks, with prices decided by supply and demand.

Each LOF must detail the maximum amount it plans to raise initially and to keep its size below the limit whenever it opens for pubic subscriptions, according to a notice sent to fund firms by the Shenzhen Stock Exchange, where mainland LOFs are traded.

The notice, dated May 9 and obtained by Shanghai Daily yesterday, also said that fund companies should return the capital within two working days to investors who were not allotted units during the sales period.

Sale agents of fund firms must finish system adjustments for LOFs by May 30 or their licenses to market the funds will be revoked, the notice said.

"The limit on LOFs is in line with earlier regulatory moves to keep the market from going wild and ensure the steady operations of the funds," said Wu Ke, a Zhongtian Investment Consulting Co analyst.

China now has 19 LOFs with combined sales of less than 50 billion yuan (US$6.5 billion), compared with total sales of all funds worth nearly US$130 billion in the industry.

The regulator is encouraging part of the country's 200-billion-yuan closed-end funds to convert into LOFs on their expiry. Closed-end funds trade on stock markets and have a limited life span.

Chinese financial authorities have been moving to boost supervision of the nation's fund industry, which has nearly doubled in size since the start of last year amid a bullish equity market.

The China Securities Regulatory Commission started early this year to limit the sizes of non-listed open-end funds to 10 billion yuan during the initial sales while investigating suspected insider trading by fund managers this month.