The Stock Exchange of Thailand (SET) has been conducting rigorous inspections and identified 36 cases of investors submitting inappropriate stock trading orders over the past 2.5 months.
In response, brokers looked to mitigate risks associated with stock manipulation by reducing trading limits and closing investors' accounts.
According to brokerage sources who requested anonymity, the SET recently elevated its level of trading supervision to enhance investor confidence.
One of these measures involves sharing information about investors who have submitted inappropriate trading orders with all member companies (brokers). This enables brokers to supervise these investors more effectively.
These measures have been in place since July 1.
The SET's capital market supervision unit continues to operate during periods of heightened stock market activity, focusing on inspecting abnormal stock price movements, in accordance with the bourse's rules and regulations.
Between July and October, the SET identified 36 cases of inappropriate trading orders involving 40 brokerages.
These inappropriate orders included matching trades, intentionally inflating stock prices, influencing prices, setting trading prices at opening and closing times, and supporting stock prices in abnormal ways, according to brokerage sources.
Although sending inappropriate trading orders does not constitute stock manipulation, these orders must be suspended to prevent potential damages, according to the bourse.
When inappropriate trading orders are identified at any brokerage, the brokerage is held accountable for supporting these orders if it fails to take action to prevent them, particularly if the orders were submitted through the marketing staff of the securities companies.
However, if investors submit trading orders on their own, the responsibility is solely with them.
According to the sources, if brokers identify investors who send inappropriate orders, they may issue a verbal or written warning based on the rules of each brokerage.
If the violations persist, the brokers can implement stricter measures, such as reducing the trading amount, which may start at 20% and increase progressively.
If it is determined investors are working with other people to commit the offences or are part of a group, their credit limit may be eliminated, and in severe cases, their trading accounts may be closed.
Customer care measures may vary among brokers. However, when abnormal activities are identified, action must be taken in accordance with the measures announced by the SET.
If a broker fails to penalise a customer, the broker may face penalties from the SET for negligence in allowing customers to commit offences.
The tighter supervision is part of the SET's efforts to prevent inequalities or advantages in brokerage order submissions, as well as to eliminate the spread of stock manipulation that could lead to widespread harm for investors.