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August 23, 2019

KRX to review automated trading by Citadel Securities

PUBLISHED : June 11, 2019 - 18:30

UPDATED : June 11, 2019 - 18:30

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South Korea’s stock market operator, the Korea Exchange, is expected to review high-frequency algorithm trading by Citadel Securities on allegations that it breached fair trade rules.

KRX will also discuss disciplinary action against the Seoul branch of Bank of America Merrill Lynch for its failure to abide by its obligations as a member of KRX by brokering the transactions.

The details of actions against US liquidity provider Citadel Securities as well as Bank of America Merrill Lynch will materialize at a forthcoming meeting of KRX’s market oversight committee. The date has yet to be determined.

By itself, high-speed trading activity is not subject to penalties. But since last year, when similar forms of automated trading caused losses to retail investors and led to petitions, concerns have arisen that such activities could disrupt stock markets in Korea. The price of an illiquid stock can instantly shoot up due to a high volume of stock transactions within a very short time, and retail investors may be duped as the system’s algorithm quickly shifts demand to other stocks.

By Son Ji-hyoung (consnow@heraldcorp.com)

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