IT glitch causes dark days at Everbright
A department office of Everbright Securities in Beijing. The China Securities Regulatory Commission banned Everbright from proprietary trading for three months following the error on August 16th. photograph: Jason Lee/Reuters
Things are not so bright for China’s Everbright Securities, which had a very bad day at the office earlier this month, when the brokerage mistakenly placed more than 3.4 billion yuan (€4.2 billion) of buy orders. The computer glitch, which caused China’s biggest share price swings since 2009, cost Everbright €24 million, though the losses could rise.
Xu Haoming resigned as president four days after regulators announced a probe into the company.
Chairman Yuan Changqing stepped in as acting president tasked with soothing investors’ rattled nerves and shoring up an 18 per cent drop in the company’s shares.
The China Securities Regulatory Commission banned Everbright from proprietary trading for three months following the error on August 16th. The watchdog said the mistake was “unprecedented”.
The ban means Everbright has to sell some of its securities holdings to help cope with a possible funding crunch.
The brokerage may be penalised because the value of equities, securities and derivatives held by its proprietary trading desk relative to net capital exceeded the regulatory limit of 100 per cent, Everbright said in a statement two days later.
The commission is planning to improve its supervision system to help prevent similar trading errors, the China Securities Journal reported. In October 2008 Larry Yung stepped down as chairman of Citic Pacific after the firm reported the biggest currency derivative loss by a Chinese company of about HK$15 billion (€1.45 billion).
In 2004 Chen Jiulin was forced to quit as head of China Aviation Oil (Singapore) Corp following a €412 million trading loss. He was subsequently jailed for four years and three months and fined $207,500 for his role in the near-collapse of the jet fuel trader.