April 24, 2024

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The Seoul branch of Merrill Lynch has been fined 175 million won ($148,700) for the investment bank’s trading that allegedly disrupted the local stock market, South Korea’s bourse operator said on July 16.

Merrill Lynch’s Seoul branch has been under suspicion that its high-frequency algorithm trading between last October and May this year destabilized the local market and caused huge losses to retail investors.

High-frequency trading is not illegal in Korea. But such trading has been a source of concern, as chances are high that retail investors who follow their trading patterns end up losing money because they cannot fully keep up with the brokerages’ quick shifts driven by their algorithmic system.

A Korea Exchange (KRX) rule bans investors from having “unfair influence” on the stock market by “excessively trading shares, given the market’s demand-supply situation.”

By Ram Garikipati and newswires (ram@heraldcorp.com)