Editor's note: The Shanghai Composite Index spiked by around 100 points on Aug 16, 2013, with turnover totaling 7.8 billion yuan ($1.27 billion). This abnormal surge stirred the market on that day and many keep stirring the stock market in the future as it has exposed loopholes.

Error puts Shanghai bourse in a spin

Shares in Shanghai had a roller coaster ride on Friday after the country's fifth-largest brokerage by market value reported a trading error.

Shares surged in the morning, probably triggered by the brokerage trading system fault and led by financial and oil giants, before easing back in the afternoon.

Traders and analysts called for an immediate investigation into possible price manipulation, while short-sellers were furious and urged the authorities to probe the case and come up with a compensation plan.[Full Story]

CSRC blames Everbright Securities for spike

A securities commission spokesman said Friday that an abnormal stock market spike seen during Friday's morning trading was mainly caused by a large number of purchase orders sent from Everbright Securities' own account.

The China Securities Regulatory Commission (CSRC) and the Shanghai Stock Exchange (SSE) are still investigating the case, a CSRC spokesman said at a press conference.

Everbright Securities Co Ltd said in a statement to the SSE that its investment strategy department encountered a problem in its arbitrage system while operating with its own funds during morning trading.[Full Story]

Rumors swirl on trading rout

A rumor has spread that a Taiwan team working for Everbright Securities Co Ltd was responsible for the trading error that triggered a surge in the mainland's stock market on Friday by placing a wrong order in the system, the 21st Century Business Herald reported.

There was also speculation that the error was caused by a typing error by a trader, who placed an order for 3 billion shares - not the intended 30 million.

Brokerage industry sources even speculated that there was a "certain cash flow from overseas" that got involved in the transaction as well.[Full Story]

Error sinks brokerage equities

The mainland's stock market rose moderately on Monday, with brokerages falling after a trading error at Everbright Securities Co Ltd last Friday caused market gyrations.

Analyst said the incident at Everbright exposed loopholes in brokerages' internal risk-control systems, and that may lead to closer regulatory scrutiny. It could also affect brokerages' proprietary trading business, they said.[Full Story]

Glitch rings regulator's alarm bell

Why was there no warning?

The debacle "has exposed the lack of a comprehensive warning mechanism in the stock exchanges," said Yin Zhongli, deputy director of the Institute of Finance and Banking at the Chinese Academy of Social Sciences. [Full Story]

How to protect individual investors?

"Clearly small investors buying blue chips without knowing the entire insider information became the biggest victims, while mature institutions and investors profiteer by taking advantage of the situation," she added.[Full Story]