Shanghai Stock Exchange Fixes Glitch That Snared Funds Worth Over USD14.1 Billion
Guo Luqing
DATE:  Apr 20 2020
/ SOURCE:  Yicai
Shanghai Stock Exchange Fixes Glitch That Snared Funds Worth Over USD14.1 Billion Shanghai Stock Exchange Fixes Glitch That Snared Funds Worth Over USD14.1 Billion

(Yicai Global) April 20 -- A system upgrade over the weekend caused a glitch that led to erroneous pricing on the CSI 300 Index and CSI 1000 Index this morning, the Shanghai Stock Exchange said, adding that the technical problem had been sorted out by the time afternoon trading started.

The abnormal pricing had a temporary impact on passively tracked index funds of more than CNY100 billion (USD14.1 billion), Yicai Global calculated based on incomplete statistics.

The CSI 300 fell over 2 percent this morning, while the CSI 1000 gained 6 percent, with some industry-specific indexes deviating even more. The CSI Innovative and Growing Enterprises Index plunged 23 percent as major mainland stock benchmarks simultaneously rose.

Funds caught up in the melee included Huatai-Pinebridge CSI 300 ETF, the largest fund tracking the CSI 300, worth CNY41.8 billion, followed by China AMC CSI 300 Index ETF with CNY29.1 billion and Harvest CSI 300 China A-Shares ETF with CNY28.1 billion, according to the latest data. China Southern CSI 1000 ETF, the largest fund tracking the CSI 1000, has about CNY200 million.

Investigation revealed that the glitch resulted from a cross-market index calculation system upgrade at the weekend, the SSE said in a statement, adding that it will carry out an in-depth look into the safety operation mechanism and improve the emergency response mechanism.

The CSI 300 Index closed up 0.36 percent and the CSI 1000 Index ended 1.63 percent higher. The Shanghai Composite Index finished up 0.5 percent, while the Shenzhen Component Index gained almost 0.9 percent and the ChiNext Index 1.1 percent.

Institutions that use programed trading may be affected by the anomaly, while most managers will fit the index themselves, Wu Yanan, chairman of internet finance platform Zhenrongbao, told Yicai Global. Investors cannot use the anomaly for arbitrage since the net value and price of exchange-traded funds is correct.

"Today's anomalies are quite obvious,” an unnamed person from a brokerage said. “Programed trading products would be suspended in the first place. If the stock market is correct, the impact will not be big. Also, not many programed transactions are conducted fully using the exchange market.”

Editor: Dou Shicong

Follow Yicai Global on
Keywords:   Shanghai Stock Exchange,Index Anomaly