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Merrill Lynch fined for spoof trading by Korea Exchange

July 17,2019
The Seoul branch of Merrill Lynch has been fined 175 million won ($148,695) for trading that allegedly disrupted the stock market, Korea’s bourse operator said Tuesday.

It had been suspected that its high-frequency algorithm trading, between October 2017 and May 2018, destabilized the local market and caused huge losses for retail investors.

Merrill Lynch violated a local stock transaction law that bans a so-called “spoofing-like deal,” the Korea Exchange said in a statement.

“Spoofing” is a banned trading tactic whereby traders enter and quickly cancel large-scale buy or sell orders on an exchange in an attempt to manipulate prices.

Over the eight-month period, the Seoul branch of Merrill Lynch took 6,220 such trades worth 84.7 billion won from a foreign hedge fund, which resulted in some 80 trillion won worth of transactions, according to the bourse operator.

The foreign hedge fund, only identified as “C” by the Korea Exchange, pocketed about 220 billion won in returns, the exchange said.

Yonhap


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