China Focus: Everbright Securities punished, faster reforms urged

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China Focus: Everbright Securities punished, faster reforms urged

(Xinhua) 09:06, August 24, 2013

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As Everbright Securities took the bitter medicine from its trading error, Chinese investors are urging faster reforms in the country's securities sector to avoid similar incidents.

China's securities watchdog said Friday it has completed an investigation of last week's abnormal trading by Everbright Securities that prompted a spike in the domestic stock market.

A spokesman for the China Securities Regulatory Commission (CSRC) said that a number of problems exist in the proprietary system of Everbright Securities and the firm fails to meet the requirement for risk control.

Due to problems in its internal management and information systems, CSRC has decided to suspend the company's own investment accounts and require it to take rectification measures.

A detailed report on the investigation results and penalties will be announced later.

BITTER MEDICINE

Erroneous trading by Everbright Securities last Friday caused a 5.96-percent gain in the benchmark Shanghai Composite Index in about three minutes.

Flaws in the firm's proprietary "strategy trading system" resulted in the placement of a huge number of buy orders.

The CSRC soon started the investigation and Everbright Securities sealed up the system and trading data.

The firm suffered an overall loss of 194 million yuan (31.7 million U.S. dollars) during trading that day.

Investors following the spike to buy stocks suffered much more than that, as the market surrendered all the gains quickly in the afternoon trading.

The company's director and president Xu Haoming was replaced by a temporary president Yuan Changqing on Thursday.