This article was displayed on the ChosunBiz MoneyMove (MM) site at 2:01 p.m. on Feb. 6, 2025.
The stock price of K3I, a listed company on the KOSDAQ market, soared on the 5th of this month. It started trading at 4,725 won and sharply rose to 5,690 won by 11:07 a.m. The increase in stock price compared to the opening was 20.42%. However, within a minute, the stock price plummeted, returning most of the gains, and closed at 4,900 won.
During the spike in K3I's stock price, over 148,000 shares were net purchased through LS SECURITIES, but within two minutes, all turned into sell transactions, pulling down the stock price. The volume of K3I sales transactions through LS SECURITIES was 944,000 shares, while the purchase volume was 940,325 shares, making it the top trading source among all. Compared to the accumulated sales and purchase transaction volumes of K3I through LS SECURITIES, which were around 40,000 shares over the last 60 trading days, this represented an increase of more than 20 times.
Among individual investors trading small-cap stocks on the KOSDAQ market, there are claims that caution is needed when LS SECURITIES appears as a top trading source. There are even speculations that there are forces abusing the open application programming interface (API) provided by LS SECURITIES. However, LS SECURITIES stated that they respond to abnormal transactions detected through the Korea Exchange by issuing warnings and rejecting custody.
According to the financial investment industry on the 6th, stocks not only of K3I but also of UANGEL, RF Systems, and INZI Controls, which were included among the top 5 trading companies of LS SECURITIES, experienced sharp fluctuations.
UANGEL soared from an opening price of 4,895 won to 5,500 won before plunging to close at 4,540 won. RF Systems also started trading at 4,440 won, rose to 5,070 won, and then closed at 4,445 won.
All these stocks share the commonality of having a market capitalization of less than 100 billion won. There are many days when the average daily trading volume also dips below 1 billion won. This implies a likelihood of stock prices fluctuation due to the surge in trading volume. INZI Controls had a trading volume exceeding 2.65 million shares the day before, which is 181 times the average daily trading volume over the last 10 trading days (14,565 shares).
There have been consistent cases over the years where stock prices fluctuate significantly when LS SECURITIES appears among the top trading desks in the KOSDAQ market. Especially as LS SECURITIES has a retail investor stock agreement market share of around 2%, it is not common for it to be listed among the top trading firms, leading some investors to interpret this as a warning signal.
The market suspects that customers may be abusing LS SECURITIES' open API. The open API allows anyone to use the data or application source code it holds. LS SECURITIES' open API is praised for its suitability in creating automated trading programs.
A source in the financial investment industry noted, "There are customers utilizing LS SECURITIES' open API, which is favorable, but some of them may abuse it," adding, "From LS SECURITIES' perspective, it would not be reasonable to make it difficult to use the open API."
LS SECURITIES explained that when they receive notification of any abnormal transactions from the exchange, they respond with a series of steps: a phone warning → written warning → advance notice of custody rejection → custody rejection.
LS SECURITIES issued warnings to five customers who received notifications of abnormal transactions among those who traded stocks of K3I, INZI Controls, RF Systems, and UANGEL the day before, and rejected custody for one individual for 10 trading days.
A representative from LS SECURITIES stated, "We will do our utmost to closely monitor and eradicate customers engaging in unfair and unhealthy transactions in cooperation with the exchange and financial authorities, following compliance standards."