A man walks past a brokerage house of Everbright Securities Co Ltd, East China's Shanghai, Aug 16, 2013. The Shanghai Stock Exchange (SSE) said Friday afternoon that the investment strategy department of Everbright Securities Co Ltd had encountered a problem in its arbitrage system while operating with its own funds during the morning trade at the bourse, following a dramatic spike in domestic stock indexes.[Photo /Xinhua]

BEIJING - 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.

Mei Jian, secretary of Everbright's board of directors, said Everbright uses its own funds for trading, so the incident did not result in the loss of clients' capital.

Mei also denied rumors that the bank applied to have morning trading canceled, adding that the company has accepted SSE's conclusion.

SSE said in the afternoon that all Friday trading will go through the normal settlement and entrustment process.

China's stock market saw a massive fluctuation during Friday's trading. In late morning trading, the benchmark Shanghai Composite Index spiked 5.96 percent within three minutes.

More than 70 stocks, led by bank and oil shares, rose by the daily limit of 10 percent.

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.

Trading of Everbright shares, which rose 6.69 percent in the morning amid big gains in the financial sector, was suspended on Friday afternoon.

Early gains for Chinese shares were erased during afternoon trading, with the Shanghai Composite Index closing down 0.65 percent.

Mei Jian said the company's arbitrage system will not be used again until the company finds out how it failed.

"The company's other systems are functioning normally, " Mei said.

Mei also denied a rumor that the company's internal simulated trading system was used in real trading, resulting in an abnormally large amount of purchasing orders.

"We are probing the case and have seen some developments. But it will take more time to come to a correct and complete conclusion," Mei said.

Stock analysts said Friday's incident demonstrated the existence of loopholes in the trading process used by Chinese brokerages.

A Howbuy Fund research team said China's regulatory body and institutional investors should strengthen risk control and management, adding that they must not underestimate risks brought by small incidents in the financial market.

A report from Wanglong Securities said Friday afternoon's large falls indicate that the market remains weak.

The China Financial Futures Exchange said Friday that the stock-index futures market is operating normally.

Deposits will be enough to cushion Friday's fluctuation, it said.

Stock-index futures contracts allow investors to bet on and profit from either gains or declines in the market.