CHINA'S top securities regulator has completed an overhaul of the once-shaky brokerage sector, paving the way for it to re-open to foreign investment by the end of this year.

A total of 31 brokers and 11.53 million in stock accounts have been cleared up during the three-year campaign which ended on August 31, the China Securities Regulatory Commission said over the weekend.

Currently, 104 brokerage houses in the industry all meet risk-management thresholds set by the regulator with previously misused funds paid back to investors, the CSRC said in a statement.

China's stock authority launched the program in 2004 to close down financially troubled brokers and ordered stronger players to take over weaker rivals to boost the industry's competitiveness.

The CSRC late in 2005 halted vetting proposals to set up new securities houses, including Sino-foreign joint ventures, in a bid to facilitate the reform before the sector is fully deregulated to overseas institutions.

A majority of the troubled brokers were caught embezzling client funds to conduct proprietary trading. They incurred hefty losses when the stock market value plunged by nearly half between 2001 and 2005, the CSRC said earlier.

Among the 31 brokerages being treated, 27 of them have been reorganized while the other four have gone out of business, according to the statement.

Fourteen first-tier brokers have so far pushed forward 27 asset management schemes while eight securities firms have piloted nine asset-backed securitization products, the statement said.

The CSRC in June expanded a program, which had been initially limited to banks, to allow brokers to help clients invest in overseas stocks. Nine domestic brokerages have set up subsidiaries in Hong Kong, the statement said.

China pledged to re-allow foreign institutions to invest in mainland stock houses within the year during the second round of Sino-US strategic economic talks in May.

So far, eight foreign institutions including Morgan Stanley and Goldman Sachs Group have set up investment banking ventures on the mainland.

UBS AG early this year became the only overseas financial firm to have de facto management control of a mainland broker after acquiring 19.9 percent of former Beijing Securities Co.