With regards to Everbright’s trading blunder last Friday, China’s securities regulator says it will temporarily suspended some of EverBright’s trading operations such as its stock indexing capabilities. Everbright Securities has also launched a press conference to officially apologize for the accident.
China’s biggest trading glitch ever last Friday bubbled and boiled throughout the entire weekend.
Everbright Securities last Friday misplaced over 23 billion yuan, or nearly 4 billion US dollars in buy orders. It sent the Shanghai Composite soaring 5% at one stage.
The China Securities Regulatory Commission has concluded that there are flaws in EverBright’s internal controls. EverBright itself held a press conference with regards to this issue.
"There were errors in our proprietary trading system and it was these errors that caused the accident." Xu Haoming, President of Everbright Securities said.
Many experts believe that this accident reflects deeper problems within China’s financial institutions. They say it’s surprising to see an erroneous 4 billion dollar trade smooth sail its way past risk management.
"I don’t know if there are any risk controls in EverBright. If not, that’s a huge problem. If there was, but it didn’t work, that’s also a problem." Hu Yuyue, Dir. of Sec & Futures Research Inst. Beijing Tech & Business University said.
China’s securities watchdog has temporarily suspended some of Everbright’s trading capabilities. This has also sounded the alarm for China’s broader equity markets in general a market that’s been suffering from a loss of confidence from its investors.