The national stock exchanges in Korea and the Philippines have announced plans to improve their market surveillance capabilities with the implementation of new monitoring systems.
From today, the Korea Exchange (KRX) will begin using its upgraded surveillance system, which it says will improve detection of unfair trading practices, automate the analysis of trading on the exchange and introduce the use of various analytical tools to identify abnormal trading patterns.
When detecting market abuse, the new surveillance system will use a quantitative approach that will assign a score based on the perceived fairness of a trading pattern. If the score reaches a pre-determined level, the account or trade involved will be associated with suspicious trading.
KRX also says that the front-end system that its surveillance officers use has been enhanced, to increase the accuracy of market abuse detection.
Philippines partners with Korea
The Philippine Stock Exchange (PSE), meanwhile, has also unveiled plans to bolster its market surveillance capabilities by Q1 2012, based on the KRX's EXTURE system.
EXTURE includes detection rules, statistic analysis models, benchmarks and accounts relation and pattern recognition logics, and is capable of supporting one million orders per day across asset classes. The agreement with KRX to use the system is due to be completed this quarter.
The announcement follows the ongoing separation of regulatory and business functions at the PSE. The exchange's market regulation division is in the process of being handed over to an independent firm that will take charge of its responsibilities.
“The PSE has taken a major leap in improving governance by separating the regulatory and business functions through the incorporation of an independent and separate corporation that will supervise and monitor activities of trading participants,” said Hans Sicat, chairman, PSE. “Complementing this initiative is the purchase of a new surveillance system that will raise our surveillance standards to be at par with our regional and global peers. The investment in intelligent, state-of-the-art technology will help provide additional safeguards for stock market investors.”
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