Last month, a Samsung Securities employee
mistakenly paid out 2-point-8 billion shares
in dividends.
In response to the so called "Fat Finger Error",
Korea's financial bodies plan to roll out
new trading measures to prevent similar mishaps.
Oh Soo-young explains further.
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.
