3Q Earnings Announcement Season... Korea Exchange Announces Focused Monitoring of Stocks with Sharp Price Fluctuations

Stock Market Volatility Increases with Sharp Price Fluctuations
Market Warnings and Preventive Measures Rise Compared to Last Week

[Asia Economy Reporter Minwoo Lee] The Korea Exchange (KRX) is intensifying its surveillance of unfair trading activities involving stocks with sharp price fluctuations during this year's third-quarter earnings announcement season.

The Korea Exchange announced this policy in its "Market Surveillance Weekly Brief" released on the 4th.

According to the exchange, there were a total of 51 market alert actions (44 investment caution, 7 investment warning) during the five trading days from the 26th to the 30th of last month. This represents an increase of about 13% compared to 45 cases (32 investment caution, 3 investment warning) in the previous week.

Investment caution cases mainly involved the lifting of investment warning designations (11 cases), advance notices of investment warning designations (8 cases), and excessive involvement of minority accounts in buying (8 cases). Most investment warnings targeted politically themed stocks. The exchange explained, "Many politically related stocks were identified through theme keywords on major portal securities boards, Twitter, blogs, and other platforms."

Preventive measures such as written and telephone warnings also increased to 104 cases, up 31.6% from 79 cases the previous week. This level is about 21.3% higher than last year's weekly average of 85.7 cases. The increase is attributed to sharp price fluctuations caused by heightened volatility.

Key cases included a "price manipulation" act where the same individual submitted high-priced buy orders (compared to the best bid price) in divided portions over 450 times through accounts opened at multiple member firms in an investment warning stock, thereby inducing a price rise. Additionally, fictitious and collusive trading was detected, where identical price sell and buy orders were alternately submitted repeatedly to execute trades between themselves.

Market surveillance actions numbered four, the same as the previous week. Cases included insider trading (preemptive buying before favorable disclosures followed by selling after price increases, and large-scale selling before unfavorable disclosures to avoid losses) and unfair trading (suspected use of favorable information during corporate mergers and acquisitions). The exchange plans to conduct further investigations on the relevant stocks and notify supervisory authorities.

A Korea Exchange official stated, "We will intensively monitor unfair trading activities involving stocks with sharp price fluctuations as the third-quarter earnings announcements approach."

This content was produced with the assistance of AI translation services.