By Yoon Ja-young
Staff Reporter
Foreign investors doing illicit stock transactions will find the Korean bourse not as easy a target as before. The Korea Exchange (KRX), the country's stock market operator, said it will be getting timely and detailed information about those involved in questionable transactions from abroad.
The KRX announced Wednesday that it signed a multilateral agreement with 32 bourses overseas that are members of the Inter-market Surveillance Group (ISG). The ISG is a multilateral entity whose members exchange information and cooperate to effectively regulate unfair transactions on the stocks and futures markets.
It was established because unfair transactions by certain investors had become a headache for stock markets around the world after the globalization of the bourses.
The KRX has been participating in the group as an observer since Dec. 2004, and satisfied conditions for membership after the revision of the act on the real-name financial transaction system last year.
Following its joining of the ISG, the Korean bourse will receive information on investors directly from bourses overseas when it has to investigate unfair practices such as share price rigging or internal trading.
The KRX said it will mark a turning point in the investigation of market disturbers, as it was very difficult to obtain proof when an investor from overseas colluded with a local investor to rig stock prices.
For example, there was a massive buying of a local pharmaceutical company's shares by U.S. investors before it obtained a patent from the FDA in the United States in 2004. However, the investigation ground to a halt as it was difficult to gather pertinent information.
``The Korean bourse seems to have reached the level of developed countries regarding regulation on unfair transactions,'' said a spokesman at the KRX. ``We expect the signing to help lure foreign investors and accelerate cross listing with bourses in developed countries.''
The KRX will also be providing information on Korean investors to overseas bourses after approval by the Financial Supervisory Commission.