Korea Exchange in Yeouido, Seoul (Yonhap)
SEOUL, Nov. 23 (Korea Bizwire) — South Korea’s bourse operator has launched a probe into two foreign brokerages on suspicions that they might have improperly affected stock prices through massive trading ahead of a global index rebalancing last year, market sources said Wednesday.
The Korea Exchange (KRX) is looking into whether those firms — Morgan Stanley and CLSA — engaged in large-scale trading on some stocks and affected their closing prices in May last year before the Morgan Stanley Capital International (MSCI) rebalancing was announced.
The MSCI rebalancing refers to a process of stocks added or removed from the index. It usually prompts sharp fluctuations on stocks affected.
Sources said that the two brokerages were also suspected of failing to let their clients know about the trading in question.
With regard to the probe, the Asia Securities Industry & Financial Markets Association sent a letter to the KRX recently and denied all the charges.
It is an independent and regional association that has global investment banks and other financial companies as its members.
The association insisted that stock markets usually go through sharp fluctuations in time for the MSCI rebalancing.
The KRX is expected to complete the investigation into the two firms and decide on whether to punish them next month, the sources said. The bourse operator declined to comment on the matter.
(Yonhap)
