THE stock exchange has launched its own official probe into the affairs of Standard Chartered Securities and Standard Chartered Asia. Stock exchange executive director Paul Phenix said: ''I can confirm that an investigation is under way, and has been for some time. ''We will be looking into the consequences of the Securities and Futures Commission (SFC) charges, and the allegation that Standard Chartered Securities furnished false and misleading information to the stock exchange.'' The listing committee will also investigate whether Standard Chartered Asia, the merchant banking arm, should also be banned from underwriting or sponsoring initial public offerings (IPOs). Listing committee head Herbert Hui said: ''I can only work with the facts, and those are that Standard Chartered Asia was not affected [by the SFC probe] as a sponsor.'' Yesterday, the SFC's investigation papers were turned over to the stock exchange for examination. Mr Hui stressed that he did not want to turn the probe into a witch-hunt. Only Standard Chartered Securities, the brokerage arm, received a ban from involvement in IPOs for nine months. Technically, Standard Chartered Asia is not affected by the ban and could bring new listings to market if it went through another broker. Its nine months' suspension represents a huge loss of income, said to be in excess of GBP1 million (about HK$11.92 million). The stock exchange is thought to be concerned by the apparent loophole created by the SFC's findings, and may well move to impose its own ban on Standard Chartered Asia for IPO work. It has the power to ''cold shoulder'' a company for an unlimited period of time, but it is unlikely the exchange would impose a longer penalty than that already made by the SFC. The most serious issue the stock exchange will examine is the furnishing of false and misleading information by Standard Chartered Securities to the exchange. At issue is an internal investigation into trading malpractices at Standard Chartered Securities, relating to the so-called ''rat trading''. The brokerage retained an accounting firm to review the internal report. However, when the stock exchange requested a copy of the report it was told that the accounting firm would not release it due to confidentiality agreements. However, it later came out that the accounting firm did, in fact, agree to release the report to the stock exchange. It is understood that the stock exchange still has not seen a copy of the report. Once the exchange completes its investigation into the case, it will be presented before an internal court for possible disciplinary procedures. Under the rule 7.02 of the exchange rules, the possible penalties that can be given by the disciplinary committee are expulsion, being asked to resign, suspension, censure, and a fine. The most likely outcome is that Standard Chartered Securities will receive a reprimand, although the disciplinary committee does have the power to levy a fine. There is no maximum amount any broker can be fined, but $50,000 is usually considered the maximum. The exchange also has the power to investigate the employees at the heart of the affair, provided they are still working for the company. However, sources said that all of the people involved had already left the two companies. The listing committee will focus its attention on whether any of the companies mentioned in the report breached the listing rules.