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Brokerage firm close to bankruptcy after trading mistake

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(Globalpost/GlobalPost)

SEOUL, Dec. 13 (Yonhap) -- A South Korean brokerage house was made virtually bankrupt Friday after a critical mistake in an options transaction in the previous trading session.

Hanmag Securities Co., a small-scale local securities firm specializing in futures, made a numerical mistake in its options trading in Thursday's session that resulted in a loss of 46 billion won (US$43.6 million), market officials said.

Hanmag Securities announced Friday that the company failed to settle all of its transactions by the deadline of 4 p.m., making the firm practically insolvent.

The Korea Exchange (KRX), South Korea's bourse operator, said the equity capital of Hanmag hovers at around 200 billion won, raising the possibility that the small industry player could soon go bankrupt.

A KRX meeting earlier in the day failed to find a way to rescue the troubled firm. The other players in the botched deal, which met the legal requirements and could only be canceled voluntarily, were overseas investors.

It would mark the first time for a South Korean securities firm to go bankrupt from an ordering mistake, officials said.

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