Exchange Issues Member Warning to Mirae Asset Over Unreported High-Speed Algorithmic Trading Accounts

The Korea Exchange has reportedly issued a member warning to Mirae Asset Securities for failing to report its exchange-traded fund (ETF) liquidity provider accounts as high-speed algorithmic trading accounts.

Algorithmic trading refers to securities transactions conducted automatically according to predetermined rules using an automated system without human intervention.

Among these, high-speed algorithmic trading refers to a method of trading where a dedicated order-matching system is installed within a securities firm's computer center or similar facilities to place orders at high speeds.

According to the financial investment industry on September 28, the Market Oversight Committee of the Korea Exchange recently announced that it decided during a meeting on September 17 to impose a member warning on Mirae Asset Securities for violating the operational regulations of the KOSPI market.

For one related employee, the committee requested "voluntary member disciplinary action," requiring the securities firm to impose disciplinary measures autonomously.

The committee explained the violation, stating, "Mirae Asset Securities did not report its ETF liquidity provider accounts as high-speed algorithmic trading accounts even though they qualified as such."

It added, "By failing to input the high-speed algorithmic trading identification numbers, the firm submitted orders without checking quote appropriateness, such as whether the high-speed algorithmic trading numbers matched the trading accounts, thereby violating KOSPI market operational regulations."

According to Article 104-3 and other provisions of the KOSPI market operational regulations, member firms intending to engage in high-speed algorithmic trading must register as high-speed algorithmic traders with the exchange in advance.

When submitting orders, they must input the relevant high-speed algorithmic trading identification numbers.

An exchange official explained, "High-speed algorithmic trading identification numbers are necessary information used to prevent wash trading between the same entities or to collectively cancel related quotes in the event of a system error."

This violation was reportedly identified during a recent comprehensive inspection of related accounts by the exchange, leading to the sanctions, and is known to be unrelated to single-stock leverage ETFs.

The official explained, "This is an issue that occurred following the introduction of operational regulations related to high-speed algorithmic trading at the end of 2022."
※ Please note: This article was translated by AI and may contain errors.