A wrong program caused by the earthquake: Everbright Securities were fined 520 million

August 16, Everbright Securities programmers demonstrate the operation of a key, triggered a a-share market since the birth of the largest oolong, management anxious to remedy the measures, and let Everbright securities into insider trading questions.

Yesterday afternoon, the Securities and Futures Commission held a special meeting on the unusual trading events, published the findings and punishment decisions. The incident was classified as insider trading after the occurrence of the unusual incident and the short selling operation before the letter. Everbright Securities was sentenced to confiscation of all illegal income, and 5 times times the fine, the total amount of confiscated money reached 523 million yuan. Four people, such as Xu Haoming, Yang Chizhong, Shenshi and Yang Jianbo, were fined 600,000 yuan and were permanently banned from the securities market and futures markets.

In the meantime, the SFC began to conduct quantitative investments in various brokerages and sought a balance between encouraging innovation and strengthening wind control. In addition, the reflection on the existing trading system is also due to the Everbright Securities incident was put on the stage, the SFC is about to introduce a series of policies on the abnormal transactions before the firewall, after the occurrence of error correction and fusing mechanism to make provisions.

Wrong "reset" feature

The SFC's findings indicate that Everbright Securities Strategic Investment Department of the use of proprietary business strategy trading system, the order generation system in the ETF Arbitrage module "reset" function (for the undeclared stock returns), in the design of the "Buy a stock function" written "buy ETF a basket of stock functions." The execution system incorrectly orders the market price of the stock prices by default of "0", resulting in the system to the market price entrusted to the amount of the account credit limit can not be properly calibrated.

Plus the strategic Investment department has long been not included in the company's wind control system, in August 16 before the unusual transaction, the system actually run less than 15 trading days, "heavy down" function has not even opened a solid disk.

Until 11:05 August 16, traders tried to use the "reset" feature, let the third group of transactions on the day of the outstanding stock automatic replenishment, he asked the programmer, the programmer when the demonstration pressed the "reset" button, the replenishment of the purchase of 24 stocks were executed as "buy 24 sets of ETF basket Stock", and submit it to the order execution system. This led to 23.4 billion yuan order into the SSE system, 7.27 billion yuan actual deal.

"This is Everbright securities lack of internal control and management confusion caused." "The Securities and Futures Commission has developed the order generation system after outsourcing the software," the regulator said. The system itself is seriously flawed. It may be triggered sooner or later at some point in time, even if there is no unusual transaction event on August 16. ”

Insider trading

If only the system is wrong, Everbright Securities will only be the lack of internal control, management confusion of blame. But its management team in the market did not know the "short selling" decision, is the Everbright securities were identified as insider trading, severely punished the most important reason.

After the unusual transaction, 11:20, the Plan Finance Department general manager Shenshi to the Strategy Investment Department general manager Yang Jianbo inquires the situation, to the President Xu Haoming reports the market inflation possibly and the strategy Investment department's operation related, 11:40 to 12:40, Xu Haoming, Yang Chizhong (Assistant President, in charge of the Strategic Investment Department), Shenshi, Yang Jianbo and others have agreed to sell short stock index futures, convert and sell ETF hedging risks.

13 o'clock, Everbright Securities began to suspend business until 14:22, Everbright Securities before the official announcement "the morning of the company's strategic investment in the use of independent trade arbitrage system problems", investors to know the truth of the morning boom. But during this period, Everbright Securities short selling stock index futures contracts a total of 6240, converted and sold 180ETF 263 million, 50ETF funds 689 million. The above operation total profit and evade loss 87.21 million yuan.

The 87.21 million yuan is the basis for the SFC to punish Everbright Securities, in addition to confiscating the income, the SFC also imposed a 5 times-fold fine. The 4 people involved in the decision-making process were fined.

In addition, Everbright Secretary Mei in the case and the reason is not aware of the situation, rashly to reporters denied the "Oolong refers to" incident, this statement was seen as misleading investors, Mei also be ordered to correct, and fined 200,000 yuan.

In addition, the proprietary business of Everbright securities (except fixed-income securities) was stopped, the new business was suspended for approval, according to the SFC requirements, Everbright Securities will also rectify and dispose of the relevant responsible person, and will rectify the situation and the results of the report to the SFC.