A regulatory crackdown aimed at boosting investor confidence in China's ailing stock markets saw short positions shrink by a third in February to the lowest level seen in three years, according to a report by Reuters.

The report cites data from China Securities Finance (CSF), a state firm providing margin financing services in the market, as showing that the balance of stocks investors have borrowed to sell short slumped to RMB43.5bn ($6.04bn) at the end of February, 33% down from the level seen at the end of January and the lowest since July 2020.

CSF's data is stock-specific and does not reflect other short positions held via derivatives or stock futures.

Last month, the China Securities Regulatory Commission suspended brokerages from borrowing shares for lending to short-sellers and banned investors from short selling stocks bought on the same day, as part of a raft of measures to revive the market.