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No more new accounts on HOMS system
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HUNDSUN Technologies Inc, a trading platform operator controlled by Alibaba founder Jack Ma, today said it will stop opening new accounts on its HOMS system, following an official probe into its role in recent stock market rout.
Hundsun will also not allow clients to increase capital on existing accounts and will shut down any accounts with zero balances on the HOMS system, the Hangzhou-based company said in a filing to the Shanghai Stock Exchange today.
“The move is in response to China Securities Regulatory Commission’s crackdown on illegal brokerage businesses,” it said in the filing.
Hundsun’s financial investment platform HOMS enables lenders in grey market to circumvent government regulation and offer investors margin funding at higher leverage.
Unregulated margin financing is widely blamed for fuelling a highly leveraged bull run in China’s stock market and then triggering a free fall of 30 percent in three weeks.
The CSRC on Sunday declared a crackdown against illicit conduct by information technology companies in securities businesses and required brokerages to review trades and ensure the truthfulness of their clients’ identity. On Monday, the securities regulator said that it was investigating Hundsun for “clues” on securities rule violations.
Hundsun on Monday denied local media’s allegation that HOMS platform was a major cause of the recent market turmoil. It said 30.1 billion yuan (US$4.9 billion) of shares were forced-liquidated on its platform between June 15 and July 10, accounting for only 0.1 percent of the total turnover on the Shanghai and Shenzhen exchanges during the period.
Its shares plunged by the daily limit of 10 percent today, adding to a 10-percent decline yesterday.
Hundsun said the latest move would have a “certain impact” on its earnings, according to the filing. The company earlier forecasted a 60 percent to 100 percent year-on-year increase in net profit in the first half of the year.
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