Shanghai's stocks edged down Wednesday after investors were concerned about increased competition for banks and brokerages.[Businesses Registration]

The Shanghai Composite Index shed 0.61 percent to 2,207.53 points after gaining for two consecutive days.

A gauge measuring financial shares sank 2.8 percent, the biggest in two months, Bloomberg News data showed.

Banks dropped after the State Administration for Industry and Commerce approved names for five privately-funded banks this month.

"Competition among banks will increase after Internet firms and some large retailers announced their intention to set up banks," said Chen Hao, a chief researcher at Dingxin Huijin Investment Management Co. He added banks can expect more reforms and a[Hong Kong Company Formation & Registration] quarter-end liquidity squeeze.

Brokerages fell after financial information provider Dazhihui said China may allow the setting up of partnership brokerages to enhance the market's efficiency but this may erode the profit [company registration in Hong Kong, Hong Kong company incorporation]of existing brokerages. GF Securities Co fell 4 percent to 12.25 yuan (US$2).