Bahrain-based Gulf Finance House has appealed a decision by Kuwait's financial regulator to monitor its Kuwait-listed shares after the stock was traded in high volumes ahead of a company disclosure last year.

In recent months, Kuwait's Capital Markets Authority (CMA) has been clamping down on what it sees as unusual market activity. Some executives and analysts have welcomed the move but others say the watchdog is being heavy-handed.

Kuwait's regulator noticed GFH stock traded in high volumes in May 2013, the Islamic investment firm said in a statement late on Wednesday. The company's shares are listed in both Bahrain and Kuwait.

That trading spike came before an agreement signed in June between Bahrain-based Khaleeji Commercial Bank, an associate of GFH, and Bank Al Khair to study a possible merger.

GFH said there was no relation between the memorandum of understanding (MoU) and high trading volumes witnessed on May 19 to 21.

"GFH has filed a petition with CMA Kuwait against this decision," the company said, adding the CMA has not imposed a financial penalty.

The regulator notified GFH of its probe into the firm last September, and said in April this year that it would monitor the stock for six months.

At the time of the trading spike, GFH issued a market statement which said there was "no recent or major development" that could have caused the high trading volume, the company said. The CMA asks Kuwait-listed companies to explain high trading volumes.

The MoU was signed on May 30 and announced June 3 following regulatory approvals, the statement said. The merger plans were scrapped in March of this year after the two Islamic banks failed to agree on the structure and valuation of the deal.