BEIJING, Aug 21 (Reuters) - China's Everbright Securities
has been ordered to suspend lead-underwriting any
new debt financing instruments of non-financial enterprises in
the country's inter-bank bond market, the company said on
Wednesday, after a computer glitch caused a trading loss of $32
The instruction from the National Association of Financial
Market Institutional Investors (NAFMII), appointed by the
central bank to help supervise the inter-bank bond market, did
not say how long the suspension will last, according to a
company filing to the domestic stock exchange.
NAFMII demanded Everbright to conduct a self-check of its
business process, electronic system, internal compliance, risk
management and staff management, and submit the findings to the
association together with a restructuring plan by Aug. 30.
"The abnormal trading accident recently reflected big
problems in your company's internal compliance and risk control.
That does not meet the association's requirements for healthy
risk management and internal control systems on lead
underwriters," the company cited a document from NAFMII as
That is the latest penalty for the brokerage after its
mistaken purchase of more than $1 billion of mainland shares
sparked a flash rally in the domestic stock market last Friday.
Everbright incurred a $32 million trading loss as a result of
the computer glitch.
The company's shares fell the maximum 10 percent limit in
Shanghai after trading resumed for the first time since the
incident and dropped by another 6 percent on Wednesday.
The China Securities Regulatory Commission (CSRC), which
launched a formal investigation into Everbright, has barred the
brokerage from selling the shares for the next three months,
forcing it into a plan to sell some of its securities holdings
to help cope with a possible funding crunch.
Everbright Securities has suspended Yang Jianbo, the manager
of its strategic investment department, to cooperates with the
probe into its trading system, the company told a domestic
newspaper on Wednesday.
NAFMII, meanwhile, ordered Everbright Securities to take
care of the debts it has already underwritten until they mature.
The company became a lead underwriter in the inter-bank bond
market in November 2012 and the business has so far generated
revenue of about 540,000 yuan, it added in the statement.
(Reporting by Langi Chiang and Jason Subler; editing by David