SESC Proposes $1.9m Fine for Morgan Stanley MUFG over Market Manipulation

Japan's financial market watchdog, the Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Surveillance Commission (SESC), today recommended fining Morgan Stanley MUFG Securities for alleged market manipulation related to shares of railway operator, Seibu Holdings, according to a Reuters report.

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SESC has recommended that the Financial Services Agency (FSA) imposes a penalty of ¥220 million ($1.9 million), as revealed in a statement posted on its website.

Findings

The SESC said that a trader at the brokerage manipulated the market to raise Seibu's share price by conducting transactions without the intention to execute and placed a large number of buy orders at prices around the best offers on the Tokyo Stock Exchange Stock Exchange A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin A stock exchange, also known as a securities exchange or bourse represents is a facility where stockbrokers and traders can buy and sell securities.This includes shares of stock, bonds, exchange-traded funds (ETFs), or other financial instruments. By extension, stock exchanges can also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividendsStock exchanges have developed into a permanent fixture in the fin Read this Term. In total, the trader bought 416,500 shares while placing purchase orders for 9,258,000 shares on Morgan Stanley MUFG’s account.

These constituted a series of sales and purchases. Their offers of securities would mislead others into believing that sales and purchases of the shares were thriving and would cause fluctuations in the market of the shares.

According to SESC: “The trader sold Seibu shares after their price rose and cancelled the buy orders”.

Morgan Stanley MUFG said in a statement: "We sincerely accept this recommendation and we are making further improvement on internal controls. We deeply regret the incident and apologise."

Guardian of the Market

As the 'guardian of the market' independent of the supervisory functions of the FSA, the SESC plays a key role in maintaining fair, equitable, transparent, and sound markets through daily market surveillance, inspections of financial instruments business operators, investigations of market misconduct, disclosure statements inspection and criminal investigations.

The watchdog makes recommendations for administrative penalties to the FSA which rules on cases and penalises accordingly.