Securities Market Stabilization Committee: "9 Securities Firms Creating Market Not Engaging in Manipulation... No Fines Imposed"

FSS Notifies 48 Billion KRW Fine for Market Disorderly Conduct in September Last Year

[Asia Economy Reporter Heo Kyung-jun] The Securities and Futures Commission under the Financial Services Commission deliberated and resolved on the 19th that the alleged market disorderly conduct by nine securities firms acting as market makers in the stock market cannot be considered illegal and are not subject to fines.

The Securities and Futures Commission stated, "For risk management associated with fulfilling the obligations of market makers, it is inevitable to correct or cancel quotes in response to price fluctuations. It is also difficult to say that the quote correction and cancellation rates (95.68% to 99.55%) of domestic stock market makers are higher compared to foreign markets."

They further explained, "We also considered that there was no prior guideline indicating that certain types of conduct by market makers under the system approved by financial authorities could be deemed disruptive behavior."

Additionally, they added, "It is difficult to view the correction and cancellation of market maker quotes as having an unfair impact on prices, so it does not constitute market disorderly conduct and is not subject to fines."

According to the Financial Services Commission, the New York Stock Exchange's average daily correction and cancellation rate of total market orders (including market maker trades) in 2020 was about 94.6%. Overseas, the correction and cancellation rates specifically for market makers have not been officially disclosed.

The Securities and Futures Commission reached this conclusion after six meetings, including four meetings of the advisory Capital Market Investigation Deliberation Committee.

Earlier, in September last year, the Financial Supervisory Service notified nine securities firms acting as market makers?including Mirae Asset Securities, Hanwha Investment & Securities, Shinhan Financial Investment, Korea Investment & Securities, Shin Young Securities, and Bookook Securities?of fines totaling approximately 48 billion KRW for influencing prices through quote corrections.

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