SK Securities to Terminate CFD Service Used as a Channel for Stock Price Manipulation

SK Securities will discontinue its Contract for Difference (CFD) service, which has been known to be used for unfair trading practices. It is the first domestic securities firm to do so.

SK Securities announced that it will terminate its domestic stock CFD service starting July 28. The company has been offering the domestic stock CFD service since February last year.

CFD is an over-the-counter derivative transaction where profits are made by trading based on the price fluctuations of underlying assets without actually owning the investment products, settling the difference between the entry price and the liquidation price. It allows leveraged investment up to 2.5 times with margin.

Since Kyobo Securities introduced this service in 2016, a total of 13 securities firms have implemented CFD services domestically, with 12 more firms joining.

According to data submitted by the Financial Supervisory Service to Assemblywoman Yang Jeong-sook’s office, as of the end of March, the CFD transaction balance of the 13 securities firms was 2.7697 trillion KRW, an increase of 444.3 billion KRW from the end of the previous year (2.3254 trillion KRW). Kyobo Securities had the largest balance at 618 billion KRW, followed by Kiwoom Securities, Samsung Securities, Meritz Securities, and Hana Securities. SK Securities recorded 13.9 billion KRW.

The controversy arose after the stock price crash incident triggered by Soci?t? G?n?rale (SG) at the end of April. Eight stocks including Samchully, Seongwang, and Dow Data hit their daily lower limits for consecutive days, raising concerns that CFDs could be exploited for unfair trading.

An SK Securities official stated, "Securities firms independently decide whether to start or terminate services," adding, "There is no special reason."

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