Korea Exchange Conducts Planned Surveillance on SPACs and Other High-Growth Stocks... Unfair Trading Suspected in 7 Stocks

Account Detected Manipulating Prices by Repeatedly Executing Small Buy and Sell Orders

[Asia Economy Reporter Gong Byung-sun] The Korea Exchange announced that, as a result of planned monitoring, unfair trading suspicions were found in seven stocks.

On the 25th, the Exchange stated that among 17 SPAC (Special Purpose Acquisition Company) stocks with excessive stock price increases during May and June, unfair trading suspicions were found in seven stocks, and they have been referred for review.

In some accounts of the seven stocks, suspicious signs of price manipulation through abnormal order submissions during the rapid price surge period were detected. The Exchange explained that they found accounts involved in both bid and ask prices and expected prices during the two-minute single-price trading period triggered by the Volatility Interruption (VI) mechanism. When the static VI is triggered due to a sharp price increase during trading hours, these accounts submit large buy limit orders and cancel them just before the VI ends, thereby influencing the expected price. Static VI refers to entering single-price trading for two minutes when the price rises more than 10% compared to the previous single-price trading execution price.

(Provided by Korea Exchange)

For example, one stock entered static VI around 12:10 PM on a specific day due to an abnormal surge during trading hours, reaching 2,335 KRW, which is more than 10% above the opening price of 2,120 KRW. At this time, a specific account submitted a large number of upper limit buy orders simultaneously to induce other investors to submit follow-up buy orders, raising the expected execution price from 2,335 KRW to 2,735 KRW. Then, around 12:11 PM, just before the single-price trading ended, the large buy orders were canceled. This behavior was repeated during trading hours.

Linked accounts showing excessive two-way price involvement by repeatedly executing small buy and sell orders were also detected. Linked accounts are divided into price-influencing top accounts and execution top accounts, and are presumed to have divided roles. The price-influencing top accounts alternate between buying and selling, while the execution top accounts repeatedly realize small profits by buying in 3-4 divided transactions and selling all at once.

An official from the Exchange said, “SPAC stocks showing overheating patterns regardless of the confirmation of the merger target company should be cautious as rapid price drops may cause damage. We will promptly notify related agencies after the review process for these cases and will implement intensive preventive measures on accounts repeatedly involved in price manipulation of rapidly rising stocks.”

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