Global regulators sound warning over share dealing
London – Regulators have fired warning shots over frenzied share dealing in GameShop and other firms fuelled by social media chat on sites like Reddit and Facebook.
Watchdogs in the United States and United Kingdom said they were monitoring activity and potential lawbreaking, and warned traders they risked facing huge losses.
Traders should ensure they are familiar with all rules, “including market abuse”, the UK’s regulator said.
GameStop is the focus of a trading war between amateurs and Wall Street pros.
Shares in the US bricks and mortar video games retailer surged again on Friday, rising 74 per cent at the start of trading in New York. Another stock in the traders’ sights, AMC Entertainment, jumped 60 per cent.
That bucked broader market trends, which saw all three main US indexes fall roughly two per cent in early afternoon trade in New York.
Some share trading firms temporarily halted dealings on Thursday amid extreme volatility in GameStop, which has soared as much as 700 per cent in the past week. AMC Entertainment and Blackberry, which have also seen huge trading activity, were among the other companies also hit by the restrictions.
UK traders have also been sharing their thoughts and tips on trading chat forums amid mounting concerns about misinformation and share ramping.
London-listed companies have also been the focus of social media attention, including publisher Pearson and cinema operator Cineworld, although the share price movements were minimal compared with the GameStop surge.
In a statement on Friday, the UK’s Financial Conduct Authority said: “The FCA is aware of the situation and continues to closely monitor trading in UK markets. UK investors should take care when trading shares in highly volatile market conditions that they fully understand the risks they are taking. This applies to UK investors trading both US and UK stocks.
“Firms and individuals should also ensure they are familiar with, and abiding by, all regulations including the market abuse and short selling regimes in the jurisdiction they are trading in.”
In the US, the US Securities and Exchange Commission (SEC) warned against illegal “manipulative trading activity”.
The regulator added: “Our core market infrastructure has proven resilient under the weight of this week’s extraordinary trading volumes.
“Nevertheless, extreme stock price volatility has the potential to expose investors to rapid and severe losses and undermine market confidence.”
The SEC also said it would review actions that could “unduly inhibit” and “disadvantage investors”. (BBC)