J&A Securities has been ordered by the China Securities Regulatory Commission to shut a Hong Kong subsidiary which helped Guangshen Railway Co speculate in mainland stocks with its listing proceeds, company officials say. Company spokesman Yu Ziqiu said Hong Kong-based J&A Financial Services had been closed and its manager disciplined for using proceeds from the H-share company's listing to play the markets. The Hong Kong unit of the Shenzhen brokerage, one of the seven firms punished last week in Beijing's latest purge of market transgressors, was set up in January last year and offered financial services outside Hong Kong areas. J&A Financial was not licensed to run stockbroking operations, concentrating on selling shares in unlisted mainland companies to foreign investors, J&A Securities (Hong Kong) managing director Pang Keng-chan said. J&A Securities (Hong Kong) - now J&A Securities' only Hong Kong subsidiary - was formed in 1994 to act as the brokerage's major channel into the territory. It is licensed by the Hong Kong regulators to conduct stock trading, underwriting and fund management. Following the regulatory breach, parent company J&A Securities has been barred from proprietary trading for six months for its role in helping Guangshen use its 300 million yuan (about HK$278.49 million) listing proceeds to speculate in the mainland stock markets. Illegal gains of 40 million yuan were also confiscated. Guangshen chairman Ge Wenan and chief accountant Zeng Xianzhao were dismissed for entrusting the listing proceeds to the brokerage without the board's approval. Despite the closure of its subsidiary, J&A Securities (Hong Kong) said its business and expansion plans would remain. Mr Pang said: 'The saga will not affect our business development in Hong Kong.' J&A Securities (Hong Kong) is expecting to obtain its second trading seat on the Hong Kong stock exchange next month and has lined up several co-sponsor underwriting jobs in the next couple of months following the formation of a fund management business in April. Mr Pang said the 40-strong operation handled $70 million of stocks traded on the stock exchange every day. The amount was expected to be given a boost after a second trading seat was approved. Mr Pang said it would undertake two to three co-sponsor underwriting jobs, including H-share companies and local companies, in the second half of the year after participating as part of the underwriting syndicate in recent issues. 'We have taken an active role in recent initial public offerings by mainland companies such as Shum Yip Investment, Shenzhen Expressway Co, Jiangsu Expressway Co and Jiangxi Copper Co,' he said. He said the company was licensed in April to run its first investment fund, J&A China Fund, which was registered in the Cayman Islands.