KRX to Strengthen Market Oversight
By Yoon Ja-young
Staff Reporter
Stocks that are suspected of irregular trading activity will be subject to investigations, the country's stock market operator said.
Under particular scrutiny will be "theme stocks," where price rigging often occurs.
Lee Chul-hwan, chairman of the market oversight commission at the Korea Exchange (KRX), said Wednesday that the commission is monitoring theme stocks that have been overheated since last year.
"There have been around 20 theme stocks in the market since last year, including bio stocks, nuclear energy stocks and those related to Influenza A. New themes are continuing to come up in the market," Lee said.
Theme stocks refer to a group of stocks that rise or fall due to special factors such as government policy or unexpected events.
For example, shares of bicycle manufacturers soared here when President Lee Myung-bak emphasized riding bicycles as part of his administration's ``green growth'' strategy.
However, theme stocks often get overheated, often hurting small investors with fluctuating stock prices. They also become the target of stock price manipulators as their movement can be affected by rumors.
Lee said the commission is set to launch probes whenever there are irregularities such as manipulation through the spreading of false rumors.
He added that the KRX will bolster its oversight system for new markets. "Following the implementation of the Capital Market Consolidation Act, new financial products are emerging and competition is expected to get fierce among financial investment businesses. Hence, the likelihood of market soundness being disrupted is also rising," he said.
According to the KRX, irregular trading in the stock market is becoming more complex due to such developments as the home trading system.
The market operator has upgraded its oversight system so that it can catch new forms of illegal trading.
Lee said that the KRX plans to set up a database that regularly analyzes the transactions of major traders in the market.
According to the Financial Supervisory Service, irregular stock transactions caught by the regulator totaled 235 last year, 30 more than the previous year.