Everbright trading probe nearly done, CSRC says

Collection and examination of evidence into the trading glitch at China Everbright Securities Co Ltd is almost done, but further verification is needed before the results are made public, the China Securities Regulatory Commission said on Friday.

"The evidence has been handed over to the relevant departments. Because this kind of case is new to China, we organized a group of experts for consultation. The results will be announced as soon as we finish the procedure," a CSRC spokesman said.

On Sunday, the CSRC affirmed that design flaws in Everbright's trading system had triggered huge buy orders from the proprietary trading department of the brokerage, which lifted the Shanghai Composite Index more than 5 percent within three minutes on Aug 16.

At a news conference on Friday, the CSRC reiterated that no fund manager from the securities company had committed illegal actions during the transaction.

"As long as the broker sent orders to buy stocks and it has enough money to pay for the purchase, the stock exchange can confirm the transactions and conclude settlement. So, the purchase was valid," the spokesman said.

Everbright sent a 23.4 billion yuan ($3.83 billion) order to the Shanghai Stock Exchange and closed deals valued at 7.27 billion yuan on Aug 16.

Xu Haoming resigned as president of Everbright Securities on Thursday, and his role was assumed by Chairman Yuan Changqing.

Everbright Securities' Shanghai-listed shares retreated 1.4 percent on Friday. For the week, the shares fell 18.8 percent.

The abnormal transaction has raised alarms among the entire securities sector, the CSRC said. "Along with innovative development in the sector, the regulator has decided to continually improve supervision of securities companies' internal controls.

"We are working on the revision of the rules on risk management. We will take special steps to improve and strengthen regulation of the whole sector," according to the spokesman.

Market participants speculate that the shock of the trading error may lead the CSRC to slow companies' financial product innovation and delay the debut of treasury bond futures, which was listed as one of the State Council's tasks for this year.

"Preparation for treasury bond futures is going well, and they will be introduced to the market when the right time comes," the CSRC said.

On Friday, the regulator said that the Zhengzhou Commodity Exchange had won approval to start trading in steam coal futures, which can offer a hedging tool for the coal industry.