The Financial Supervisory Service Warns of Systemic Risk if Additional Shocks Occur in the Financial Market.

Meeting with CEOs of 36 Domestic Securities Companies,
,
, “The Financial Supervisory Service (FSS) expressed concerns about the potential for systemic risk in the financial market due to increasing domestic political uncertainty in the wake of the martial law situation.”,
,
, “On the 5th, the FSS held an urgent issue meeting with the CEOs of 36 domestic securities companies and urged them to proactively enhance the stability of the financial market and protect investors as key players in the capital market.”,
,
, “Yong-Il Ham, Deputy Governor of Capital Markets and Accounting at the FSS, assessed that ‘the resilience of our securities market is weaker than ever’ and warned of the possibility of systemic risk spreading across the financial sector if additional shocks occur from home or abroad.”,
,
, “He also requested the establishment of comprehensive contingency plans centered on CEOs, focusing on risk factors such as liquidity and exchange rates to prepare for rapidly changing market conditions.”,
,
, “He further instructed, ‘Strengthen internal monitoring including the detection of abnormal transactions to ensure investor protection is not neglected and conduct thorough internal controls.'”,
,
, “A request was also made to check internal controls for each securities company.”,
,
, “This is due to recent incidents involving employees pursuing personal interests and an ETF LP financial accident at Shinhan Investment Corp, attributed to internal control failures.”,
,
, “Deputy Governor Ham emphasized a detailed inspection under the CEO’s responsibility from the perspective of ‘vertical internal control’ by heads of divisions and ‘horizontal internal control’ by management departments like risk and compliance.”,
,
, “He also called for attention to strengthening internal control capabilities in IB operations, which have seen a concentration of financial accidents and illegal activities recently.”,
,
, “Deputy Governor Ham stated, ‘Redesign the performance compensation system in a way that aligns with the original purpose of business units within securities companies.'”,
,
, “He warned against acts exploiting information asymmetry, such as inflating public offering prices, misrepresenting important facts, mass selling immediately post-listing, and abusing tender offer systems during IPO management.”,
,
, “Ham stressed, ‘Many acts have been identified where issuing companies or securities firms only pursue their own interests by exploiting information asymmetry with clients.’ He urged vigilance, stating that severe action would be taken against cases where conflicts of interest with investors are neglected or underwriters’ duties of care are violated.”