Everbright President Resigns after Trading Mistake
(Beijing) – Xu Haoming resigned as Everbright Securities' president on August 22, six days after the firm made a trading mistake that rocked the A-share market.
His position will be temporarily filled by board chairman Yuan Changqing, the brokerage said.
The announcement came shortly after the securities firm suspended Yang Jianbo, head of its strategic investment department. The regulator and the company say the department was responsible for sending a huge amount of erroneous acquisition orders to the Shanghai Stock Exchange on August 16.
The mistake pushed the market's benchmark index up to 5.62 percent from its level the previous day.
The China Securities Regulatory Commission (CSRC) and Everbright Securities said the firm's trading system was to blame for the mistake. No human error was found. The CSRC is still looking into the matter.
The securities firm has been temporarily barred from serving as a lead underwriter for non-financial enterprises' debt financing instruments. The restriction was imposed by the National Association of Financial Market Institutional Investors (NAFMII), which regulates the interbank market.
The situation at Everbright Securities reflects severe problems with its internal control and risk management system, NAFMII said when it announced the punishment on August 21.
It required the securities firm to thoroughly examine all of its operations related to the underwriting of non-financial enterprises' bonds and submit the results by the end of this month.
A component of Everbright Securities' trading system involved in the error was bought from software developer Shanghai Mecrtsoft Tech. Co. Ltd., which also provides technical support to other financial institutions.
There have been concerns that other institutions may be vulnerable to similar problems.
However, the securities regulator tried to ease these worries by saying that Everbright Securities is the only user of the high-frequency trading system developed by Mecrtsoft. The latter was contractually bound to not supply other customers with the same trading system until February.
Seventeen securities firms and four futures companies are using another investment and asset management software designed by Mecrtsoft, the CSRC said. No problem has been reported with that software, the regulator said, adding that it will put all computer trading systems under closer scrutiny.
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