Everbright Securities names interim chief after CEO resigns

The CEO of Everbright Securities Co, ­Xu Haoming, resigned from the brokerage Thursday after the company mistakenly created a dramatic swing in the benchmark Shanghai Composite ­Index on August 16.

The brokerage, the fifth-largest in China in terms of market value, released an announcement Thursday saying the board of directors had approved Xu's decision to resign. The board also elected Yuan Changqing, the company's chairman, as interim CEO, the notice said.

Trading of shares in Everbright Securities was suspended on Thursday afternoon, and will ­resume Friday.

The company caused a sudden spike in the Shanghai Composite Index on August 16 after its trading system mistakenly created 26,026 orders and sent them to the Shanghai Stock Exchange.

Then, on Monday, the company sold 10-year government bonds with a face value of 10 million yuan ($1.63 million) at an incorrect price. Shares in the company plunged the following day.

Li Bo, an analyst at GF Securities, told the Global Times Thursday that the worst is over for Everbright Securities.

"The CEO has left, a new leader was appointed and the company closed the short positions of ­index futures contracts it bought Friday, so Everbright Securities has resolved the major risks that the Friday and Monday incidents caused," Li said.

The newly appointed Yuan needs to rebuild Everbright Securities' image as a professional brokerage and to conduct self-investigations as requested by the China Securities Regulatory Commission (CSRC) and the National Association of Financial Market Institutional Investors, Li said.

Trading of shares in Everbright Securities was suspended on August 16 afternoon and shortly after trading resumed on Tuesday morning, the shares fell by the daily limit of 10 percent to 10.91 yuan a share. The company's shares closed at 9.98 yuan on Thursday .

The CSRC has launched an investigation into Everbright Securities, and it has barred the company from proprietary trading for three months.

The company could face more difficulties if the CSRC finds it deliberately created the August 16 mistake in order to manipulate the ­market.

"If that is the case, the Shanghai Composite ­Index will drop and many investors will seek compensation," said Li.

The commission also decided to widen its investigation of stock trading systems to all ­brokerages following its probe into a small Shanghai-based company that made the high-frequency trading software used by Everbright, a CSRC spokesman said in a question-and-answer transcript posted to the regulator's website late on Wednesday.