Huagang Light Faces Second Settlement Default This Year, 9 Brokerages Report NT$17.36 Million in Breaches

The GreTai Securities Market (GTSM) announced on the 31st that Huagang Light (4979-TW), a major listed optical communications manufacturer, has defaulted on settlement obligations, with a total amount reaching NT$17.36 million. The breach was reported by nine brokerage branches, including Changhua Bank, KGI Po-Ai, Cathay Dun-Er, Hua Nan Nan-Zi, Fubon Tainan, Fubon Securities, Yuanta Juguang, Yuanta Shan-Hua, and SinoPac Tianmu. This is the second settlement default incident involving Huagang Light this year.

Earlier in April, Huagang Light faced a default of NT$16.79 million reported by First Capital Hwa Jiang (then the third such case on the OTC market this year). Just three months later, the same stock has again seen a massive default, and unusually, nine brokerage outlets jointly filed the report—drawing strong market attention to the stability of shareholding structures within the optical communications sector.

Statistics show that as of the 31st, 18 listed or OTC stocks have breached the settlement amount threshold requiring public disclosure this year, with 10 of them being OTC-listed stocks.

Tracing back under the T+2 settlement mechanism, Huagang Light’s current default occurred on July 29. On that day, the stock faced intense selling pressure immediately after market open, quickly dropping to NT$404, with a single-day decline exceeding 5%. This suggests large-scale fund selloffs or day traders buying high and selling low during intraday trading.

Given that nine brokerages simultaneously reported the default, market observers speculate that multiple short-term traders or day traders misjudged the market direction or got trapped in long positions on July 29. As the stock price rapidly declined, they were unable to close their positions in time and failed to cover the required settlement payments (or day trading loss differences) before the July 31 deadline, ultimately leading to a chain reaction of settlement default reports from nine brokerages.