Published On: Mon, Feb 28th, 2011

KRX Imposes Sanctions against Deutsche Securities Korea and Hana Daetoo Securities

On the basis of findings of the investigation into the causes of sudden market tumble on November 11, 2010 (the option expiry day), the Market Oversight Commission of the Korea Exchange (KRX) decided to fine the Deutsche Securities Korea (DSK) KRW 1 billion, the maximum member fine, and request the DSK to discipline its employees implicated to the incidence, for violating the market regulations, specifically, for negatively impacting on the stock prices by accepting the orders undermining the fair trading system and selling a large quantity of securities for its own account and playing a significant role in a specific investor gaining a huge unfair profit, thus damaging the credibility of KRX. In addition, a warning notice was issued to the Hana Daetoo Securities Co., Ltd. for violating the market rules related to member margin for trading derivatives products.

The DSK not only accepted the entrustment of a large bid order of put options and a large ask order of stocks, but also played a significant role in a specific investor gaining a colossal amount of unfair profit. Then, by submitting a series (7~8) orders to sell a large quantity of securities, which is obviously excessive considering the supply and demand situation in the market, for its own account, the DSK manipulated the prices of concerned stocks and KOSPI. Additionally, the DSK violated the reporting requirements of members that are established to prevent unfair trading.

It was found that the Hana Daetoo Securities Co.,Ltd. Violated the market rules related to collection of customer margins, i.e., collection of ex-post customer margin after the deposit deadline and accepting the additional orders for the account where the customer margin has not been paid.

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