The tech firm accused of facilitating reckless trading behind China's stock market crash said on Thursday that it has taken steps to stop speculators using one of its systems to buy stocks using risky leverage.
Hangzhou-based Hundsun Technologies Inc. said it won't allow any more clients to open accounts in its HOMS service, which was designed to facilitate trading by small assets managers but has been increasingly used by stock market investors with money borrowed outside approved channels.
The company said it will close accounts with no assets and forbid clients to put additional money into their HOMS accounts.
The move will have a material impact on the company's profit, according to Hundsun, which estimates that its net profit attributable to shareholders increased by 60 to 100 percent in the first half of this year.
While China's stock regulator has recruited domestic brokers and listed companies to help stem a freefall in stock prices, it has also begun to look into reckless margin lending activities through unofficial channels, more than 80 percent of which has been routed through Hundsun's HOMS service, according to the Securities Association of China.
The recent correction saw the benchmark Shanghai Composite Index tumble by more than 30 percent since its peak in mid-June. ChiNext, which tracks small-cap Chinese firms listed in Shenzhen, saw an even sharper correction during the same period.
Hundsun issued a statement on Monday refuting the allegations made against it in Chinese social media. It said sell-offs through HOMS over the past four weeks accounted for a meager 0.104 percent of the 28.86 trillion transactions during the period on the Shanghai and Shenzhen bourses.
