Financial authorities to introduce stricter trading measures after Samsung Securities 'Fat Finger' incident
- 6 years ago
Last month, a Samsung Securities employee mistakenly paid out two-point-eight billion shares in dividends.
In response to the so called "Fat Finger Error", South Korea's financial bodies plan to roll out new trading measures to prevent similar mishaps.
Oh Soo-young reports.
Korea's market authorities will enforce more stringent trading measures on securities firm employees selling their company stocks.
The Financial Services Commission and other key regulators on Monday announced a set of measures to prevent erroneous transactions, and regain the trust of investors after Samsung Securities' fat-finger incident last month.
Samsung Securities accidentally paid out two-point-eight billion shares in dividends to its employees.
This caused massive market confusion, as five-million ghost shares worth 184 million U.S. dollars, were subsequently sold off before the system was fixed.
Regulators have largely blamed the lax monitoring system which failed to prevent a large-scale sell-off of stocks that only existed on paper.
In order to prevent similar accidents, regulators plan to require securities firms to adopt a real-time monitoring system rather than managing the balance of stocks after market close.
This new real-time system discloses the balance and trade volume of stocks at the time of trading, which will help to make sure the transactions are legitimate.
An alarm will be raised on orders that exceed the approved ratio of tradable stocks, and financial bodies will have to approve large-scale orders that exceed the ratio, as well as any potentially erroneous orders.
And an emergency button system will allow the security firm to pull the breaks on any faulty transactions.
Securities firms will also have to improve the way they manage their employee stock ownership system, separating the processing of cash dividends and stock dividends.
Authorities also plan to expand short-selling opportunities for individual investors, as there's criticism that institutional investors mostly benefit from the system.
Regulators plan to roll out the measures in phases from the third quarter of this year.
Oh Soo-young, Arirang News.
In response to the so called "Fat Finger Error", South Korea's financial bodies plan to roll out new trading measures to prevent similar mishaps.
Oh Soo-young reports.
Korea's market authorities will enforce more stringent trading measures on securities firm employees selling their company stocks.
The Financial Services Commission and other key regulators on Monday announced a set of measures to prevent erroneous transactions, and regain the trust of investors after Samsung Securities' fat-finger incident last month.
Samsung Securities accidentally paid out two-point-eight billion shares in dividends to its employees.
This caused massive market confusion, as five-million ghost shares worth 184 million U.S. dollars, were subsequently sold off before the system was fixed.
Regulators have largely blamed the lax monitoring system which failed to prevent a large-scale sell-off of stocks that only existed on paper.
In order to prevent similar accidents, regulators plan to require securities firms to adopt a real-time monitoring system rather than managing the balance of stocks after market close.
This new real-time system discloses the balance and trade volume of stocks at the time of trading, which will help to make sure the transactions are legitimate.
An alarm will be raised on orders that exceed the approved ratio of tradable stocks, and financial bodies will have to approve large-scale orders that exceed the ratio, as well as any potentially erroneous orders.
And an emergency button system will allow the security firm to pull the breaks on any faulty transactions.
Securities firms will also have to improve the way they manage their employee stock ownership system, separating the processing of cash dividends and stock dividends.
Authorities also plan to expand short-selling opportunities for individual investors, as there's criticism that institutional investors mostly benefit from the system.
Regulators plan to roll out the measures in phases from the third quarter of this year.
Oh Soo-young, Arirang News.