NSSMC has warned the leading Ukrainian stock exchanges for inaction to prevent manipulation

The national Commission on securities and stock market (SCSSM) issued PJSC «Ukrainian exchange» (UB), PJSC «stock exchange Perspective», PJSC «Kyiv international stock exchange» (cmpb) and PJSC «stock exchange PFTS» (all-Kiev) warning for inaction to prevent manipulation.

According to a press release stock market, the relevant decisions adopted by the authorised persons of the regulator on 28 April, after consideration of cases in respect of these exchanges.

Thus, according to the NSSMC, the members entered into PFTS stock exchange contracts with securities of certain issuers on the eve of the publication of information on important corporate events, artificially influencing the exchange rate. In particular, 11 Nov 2013 merchants securities, LLC «trade target» and PRJSC IFC Art capital» (both Kiev) during the trading session has concluded contracts with shares of PJSC «Concern «styrene» in anticipation of the publication of information on holding of the extraordinary meeting of shareholders. «These operations were aimed at the formation of another stock exchange securities course, than that which would have been in the absence of these transactions. In this case, the traders were interested to exercise their right to buy shares at artificially established exchange rate at the date of publication of the information», — the document says.

Another case against PFTS concerned a securities trader Forvard, the capital» (Kiev), which during the trading session on 25 December 2013 entered into exchange contracts with shares of PJSC «Alliance Bank» on the eve of the publication of information on holding of the extraordinary meeting of shareholders.

«These transactions also fall under the features of price manipulation. But in this case, the merchant was interested in the understatement of the exchange rate before making a decision about increase the authorized capital of the Bank,» argues the decision controller.

According NCBCP PFTS in both cases since the outbreak in actions of participants of exchange trades suspicions of manipulation was within one month to verify the information, including the reasons that may have led to the manipulation.

In respect of «Ukrainian stock exchange» the regulator has determined that the exchange did not take measures to prevent manipulation on the part of exchange members — traders securities of private JSC «Financial company «Sokrat» and OOO «Financial company «Sokrat» (both Kiev), who in the period from 25 March to 22 April 2013 systematically entered into the transaction with the shares of PJSC «Donetsk ore-repair plant».

«The analysis published regular annual reports of the Issuer, NSSMC has established that the prices for securities of PJSC «Donetsk ore-repair plant», which has evolved as a result of trading on the UX in the aforementioned period, do not conform with the financial and economic activities indicators of the Issuer. In the result, NSSMC August 20, 2013 adopted decision on establishing the signs of fictitious nature of the Issuer and his shares included in the list of issuers with signs of fictitiousness», — reported in a press release.

In addition, the regulator has seen in the actions of the members of the CMFB and exchanges «Perspective» of several signs of manipulation, being ignored by the exchanges.

NSSMC said that CMFB in the period from 11 July 2014 to 2 September 2014 the members of the exchange — dealers in securities, OOO FC «Expert», «FC – Guardian», LLC «invest Brok» systematically entered into exchange contracts with shares of PJSC «Impuls plus», PJSC «credit Bureau «Credit service», PJSC «Dominanta kollekt» and PJSC «PMK №20″ (all – Kiev), which was unjustified growth of prices for these shares not comply with the financial and economic indicators of the activities of these issuers.

In addition, the results of such transactions, the owner of the securities has not changed, the transaction did not have obvious economic sense, they were merchants in their own interests repeatedly throughout the trading day, in many cases, buying and selling of these securities occurred prior to the closing of the trading session to mislead market participants with respect to the established exchange rate.

Subsequently, the regulator took the decision on establishing the signs of fictitious issuers of data, and their shares included in the list of issuers with signs of fictitiousness.

A similar situation was observed on the stock exchange «Perspective». In the period from 23 Jan 2015 to 30 Jun 2015 exchange members — traders securities of PJSC «Management technologies», LLC «asset», LLC «Central broker» systematically entered into the transaction with the shares of PJSC «FB «Perspective» and PJSC «communication stock centre» (Dnepropetrovsk), which only created the idea of the course of the exchange of these securities, does not comply with the financial and economic performance indicators of the Issuer.

«These deals were several obvious signs of manipulation. Include securities listed issuers in the listing, the stock exchange was obliged to see the published regular reporting issuers, particularly information, to prevent manipulation. On the basis of this information exchange could be set, whether the corresponding increase in the market prices for securities of issuers with financial and economic performance indicators of issuers», — notes the regulator.

In addition NCBCP indicates that as at 25 April 2016 on the facts of price manipulation on the stock market regulator opened 143 cases, of which in the current year was considered and decided in 11 cases, under this type of offense.

According to the results of consideration of cases in respect of securities dealers, applied financial sanctions for a total sum of 1,9 million UAH, revoked two licenses to carry out professional activities.

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