CSRC probe sparks HOMS move
Print Edition
Hundsun Technologies Inc, a trading platform operator controlled by Alibaba founder Jack Ma, yesterday said it will stop opening new accounts on its HOMS system following an official probe into its role in the recent stock market rout.
Hundsun will also not allow clients to put more money into existing accounts and will close any accounts with zero balances, the Hangzhou-based firm said in a filing to the Shanghai Stock Exchange yesterday.
“The move is in response to the China Securities Regulatory Commission’s crackdown on illegal brokerage business,” it said.
Hundsun said the latest move would have a “certain impact” on its earnings, according to the filing. The company earlier estimated a 60-100 percent year-on-year rise in net profit in the first half of this year.
The CSRC on Sunday declared a crackdown on illicit conduct by information technology companies in the securities business. It also required brokerages to review trades and ensure the true identity of their clients. On Monday, the CSRC said it was investigating Hundsun for “clues” into alleged securities rule violations.
Unregulated margin financing is blamed for fueling a highly leveraged bull run in China’s stock markets and then causing a 30 percent slump in three weeks.
Hundsun’s HOMS platform enables lenders in the gray market to circumvent government rules and offer investors margin funding at higher leverage.
Hundsun on Monday denied a local media’s report that its HOMS platform was the major cause of the recent market turmoil. It said 30.1 billion yuan (US$4.8 billion) of shares were liquidated on its platform between June 15 and July 10, or accounting for just 0.1 percent of the total turnover on the Shanghai and Shenzhen bourses during the period.
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