Scandals may boost reforms

Recent incidents highlight the lack of internal risk controls in the nation's bond market

The latest scandals in the Chinese bond market have revealed weak internal risk control at financial institutions, which may help accelerate the reform of China's financial regulation toward a more coordinated regime, analysts said on Monday.

One incident that shook the market was the bond financing scandal involving Sealand Securities Co, a mid-sized securities firm which is facing huge losses for trading bonds through high-risk leveraging tools. The firm later claimed that the trading contracts were fake documents drafted by former employees who forged the firm's official seal.