Brokerage responsible for bond scandal

Updated 2016-12-22 09:28:43 Shanghai Daily

Sealand Securities has accepted responsibility for a scandal after the securities regulator stepped in to investigate amid concerns over financial stability, the brokerage said yesterday.

Sealand will take responsibility for the scandal involving forged bond agreements and look into criminal liabilities of its two former employees as it defended the "trust and order of China's bond market," the brokerage said in a statement filed to the Shenzhen Stock Exchange.

Two of the brokerage's former employees were alleged to have signed unauthorized bond transaction agreements with Hebei-based Bank of Langfang by forging the brokerage's seal. The bond defaulted after a recent tumble in bond prices, local media said last week.

The China Securities Regulatory Commission gathered over 22 involved institutions for negotiations on Tuesday night, 21st Century Business Herald reported, adding that the amount involved in the scandal was around 20 billion yuan (US.9 billion) and the floating loss on the brokerage's books stood at 1 billion yuan.

Some participants at the talks questioned if there was a need for the two former employees to forge the seal since Sealand is the final recipient when the bond matured.

But the meeting agreed to a consensus of risk sharing amid pressure from the CSRC to "maintain stability of the bond market," the newspaper cited participants as saying.

Similar practices, in which a brokerage or bank temporarily holds another party's bond assets, are prevalent in the industry but they remain in a gray area, analysts said.

"This incident has clearly dampened market sentiment and broken the trust between banks and smaller non-bank financial institutions," OCBC economist Xie Dongming wrote in a note on Monday. "It may take some time to repair the trust."

China's bond market calmed after Sealand's announcement, as the country's 10-year treasury bond futures rebounded 1.57 percent yesterday.

Chinese bond prices fell sharply last week after the US Federal Reserve raised its interest rate for the second time in a decade and indicated a faster-than-expected pace of monetary tightening.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58May 23 2018 22:43:30

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16May 23 2018 22:43:30

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18May 23 2018 22:43:30

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

Most Watched

China World Business Sports Showbiz Audio
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
China World Fun Travel Entertainment Sports
Beijing Shanghai Guangzhou
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords