‘If they recur, we will sanction all irregularities’

The Croatian Financial Services Supervisory Agency continues to monitor the trading of shares of Croatia Airlines and Mediterranean Shipping and will sanction any irregularities that may recur, particularly concerning those brokerage firms that have already been subjected to a conditional revocation of their securities trading license – Zagreb’s Antea brokers, or are under the Agency’s supervision – Zagreb’s Abacus brokers, Sisak’s Complete Line, and Hypo Alpe-Adria Bank, it was learned today from Hanfa.

Last week, Hanfa annulled transactions involving shares of Croatia Airlines and Mediterranean Shipping executed on the Zagreb Stock Exchange on Wednesday, October 17, after the prices of those shares rose by 188.19 percent and 350 percent, respectively. Due to the aforementioned transactions, Hanfa also filed a request on October 19 for the initiation of a misdemeanor complaint against the Zagreb Stock Exchange and the responsible person for trading supervision, due to non-compliance with the Exchange’s rules approved by the Agency.

They emphasize that the Exchange “represents the first line of defense against manipulation” and should therefore be the first to prevent similar situations. The supervision conducted by Hanfa established that brokers from OTP Bank, Rasta, Štedkapital, Hypo Alpe-Adria Bank, Centar Bank, Complete Line, Croatia Bank, Abacus brokers, and HITA securities participated on the buying side and in the significant price increase of Croatia Airlines shares. On the selling side, or in the price decrease of the same shares, brokers from Antea brokers, Abacus brokers, Hita securities, and Credosa participated. In the price increase, or on the buying side of Mediterranean Shipping shares, brokers from Podravska Bank, Antea, and Abacus brokers participated, while on the selling side, i.e., in the price decrease, Ilirika securities were involved.

Hanfa points out that it is evident that “large and serious” brokerage firms did not participate in these transactions, as they rejected such orders. They also add that brokerage firms with direct access to e-trading must “work on automatic alerts when non-standard orders are placed and define this with a special agreement with clients.” They remind of the Regulation on the classification of clients based on which brokerage firms and banks are obliged to classify their clients, considering their knowledge, experience, financial situation, and investment goals, into “retail” and “professional” investors, which will also determine the rules of conduct towards these categories of clients, and which comes into effect on December 1 of this year. (Hina)