In August, South Korea’s financial auditor and the Korea Exchange set out to scrutinize Merrill Lynch’s Seoul office over mounting complaints that the US investment bank’s high-speed trading was unfairly disrupting local stock prices.
About six months later, it remains to be seen how far the Financial Supervisory Service has come in terms of monitoring high-frequency trading and collecting evidence.
The FSS and KRX had strengthened their monitoring of the investment bank after a large number of retail investors -- especially those on the secondary bourse Kosdaq -- launched a petition on the presidential office’s website demanding that authorities limit Merrill Lynch’s trades here.
“We are currently looking into a ‘foreign securities company’ which was widely problematized by the media and investors last year for its algorithm-based high-speed trades,” a high-ranking FSS official told The Korea Herald. He did not specify the name of the company.
“As of now, we have identified the foreign companies behind these high-frequency trades that have been facilitated by the securities company. We’ve been closely monitoring those firms and have collected a significant amount of preliminary evidence on them,” he said.
The FSS plans to further elaborate if it finds sufficient grounds to confirm its suspicions and refer the case to the Financial Services Commission’s Securities and Futures Commission and the prosecution, according to the high-level official.
There has been limited information as to exactly who is carrying out the high-frequency trades. However, the culprit is widely rumored to be not Merrill Lynch itself, but an artificial intelligence-powered foreign hedge fund that is facilitating trades through the US investment bank.
Merrill Lynch’s Seoul branch is a subsidiary of Bank of America Merrill Lynch. The firm engages in fixed income, currencies and commodities, equities and investment banking business.
By Sohn Ji-young (firstname.lastname@example.org)