Financial Authorities Conduct Comprehensive Investigation of 3,400 CFD Accounts Across 18 Securities Firms
Financial authorities are launching a full-scale investigation into Contracts for Difference (CFD) accounts following the crash incident triggered by Societe Generale (SG) Securities.
On the 14th, the Financial Services Commission, the Financial Supervisory Service, and the Korea Exchange announced that they will conduct a focused inspection on approximately 3,400 CFD accounts to determine any links to unfair trading such as stock price manipulation.
The Financial Services Commission began investigating the crash incident caused by SG Securities in mid-last month and confirmed that a significant number of CFD accounts were involved in stocks suspected of price manipulation.
The Financial Services Commission and others decided to inspect all CFD accounts held by 13 domestic securities firms and 5 foreign securities firms. Earlier, on the 11th, Kim Ju-hyun, chairman of the Financial Services Commission, mentioned at the National Assembly's Finance and Economy Committee plenary session that "a full investigation of 3,400 CFD accounts will be conducted as part of a planned thematic investigation."
The Korea Exchange will begin reviewing transaction records from these CFD accounts starting January 2020 through last month, beginning next week, and aims to complete the inspection within two months. While the Exchange’s usual abnormal transaction inspections take about 3.5 months, this focused inspection will be expedited by establishing a special inspection team within the Exchange’s Market Surveillance Committee. The Exchange plans to concentrate on price manipulation, fraudulent trading using CFD accounts, and suspicious transactions similar to those in the SG Securities incident.
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If any suspicious trading activities are detected during the inspection, the Financial Services Commission and the Financial Supervisory Service will immediately initiate investigations.
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