577 Monthly Market Actions During Intensive Response Period for Unfair Trade... Improvement in Market Soundness

Announcement of Next Month's Short Selling Unfair Trade Inspection Results

(Provided by Korea Exchange)

[Asia Economy Reporter Gong Byung-sun] The Korea Exchange Market Surveillance Committee (MSC) announced on the 27th that during the intensive response period to unfair trading from October last year to June this year, it took an average of 577 market actions per month.

During the intensive response period to unfair trading, the number of market warning actions averaged 274 per month, and preventive actions were 303 per month. Compared to the first half of last year, when the monthly average market warning actions were 1,023 and preventive actions were 391, these figures decreased by 73.22% (749 cases) and 22.51% (88 cases), respectively. The MSC explained, "In the first half of last year, the number of market warning actions temporarily surged due to increased fluctuations in stock indices compared to the average year," and added, "Due to strong responses to unfair trading and reduced stock price volatility, the number of market warning activations decreased during the intensive response period, maintaining a stable level."

Preventive actions returned to normal levels. Although the number of preventive actions against phantom orders and accounts submitting unhealthy orders slightly increased in the first half of last year compared to the average year, active preventive measures were requested during the intensive response period. As a result, the monthly average number of preventive actions was even lower than the 371 cases in 2019.

During the intensive response period, the Exchange expanded efforts to raise investor awareness by regularly distributing market surveillance trends, diversifying investment caution media such as webtoons, and expanding non-face-to-face preventive education. Additionally, the use of K-ITAS by listed companies was enhanced. K-ITAS refers to the listed company’s treasury stock trading alert service. During the intensive response period, the number of newly registered companies for K-ITAS was 46, an increase compared to 28 companies in the first half of last year.

Major unfair trading issues were also intensively addressed. The number of newly monitored stocks, which was less than 20 per month before the intensive response period, increased to 22. Factors contributing to the increase included the operation of a fraudulent trading detection system, focused monitoring of companies subject to substantive review of listing eligibility, and planned monitoring of SPAC-related stocks.

During the intensive response period, a total of 126 hearings were initiated, an increase from the average of 85 cases in the previous half-year. Hearings covered unfair trading in leading chat rooms, fraudulent trading using no-capital mergers and acquisitions (M&A), unfair trading by marginal companies, and unfair trading involving convertible bonds.

Since last year, 511 stocks across 12 themes including COVID-19, virtual currency, non-face-to-face, and politicians have been designated as theme stocks and utilized for market surveillance. During the intensive response period, the Exchange requested hearings for 24 stocks suspected of unfair trading.

A total of 702 complaints reported during the intensive reporting period were also utilized. Among these complaints, 44 cases related to actual unfair trading were used for market surveillance, with 13 reward payments decided, totaling 32.57 million KRW, an increase from 1 case and 280,000 KRW in the same period last year.

Supervisory activities through the short-selling monitoring system were also conducted. A special short-selling supervisory team consisting of 15 members in 2 teams was newly established at the department level, and a comprehensive situation room was set up to monitor related indicators such as top and rapid increases in short selling and short-selling quotes in real time.

Unfair short-selling trading that occurred in 13 market maker accounts from January 1, 2017, to June 30 last year was also inspected. The Exchange stated, "The inspection results will be announced in July or August."

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