[Financial Services Commission Report] "Building a Transparent Capital Market to Restore Investor Confidence"

[Asia Economy Reporter Minji Lee] This year, the Financial Services Commission's main task is to build a sound stock market and establish strong trust through investor protection.

On the 19th, the Financial Services Commission announced its 2021 work plan containing these details. First, the FSC plans to restore investor confidence damaged by a series of private equity fund incidents such as Lime and Optimus by establishing a safe and transparent investment environment. The ongoing inspections of private equity funds are scheduled to be completed within the first quarter of this year. A full inspection of private fund management companies will also be conducted by the end of 2023, with 50 to 60 companies inspected annually, targeting up to 180 private fund management firms.

Additionally, the FSC will support the market stabilization of the investor protection system for complex financial investment products announced at the end of 2019 and work to reduce incomplete sales. For financial investment products with high principal loss risk, recording and cooling-off systems will be applied, and key explanatory documents will be provided to enhance investors' understanding of the products.

As the number of individual investors investing in overseas stocks has increased, strengthened investor protection measures will also be implemented. Last year, individuals net purchased about 21 trillion won worth of stocks in overseas stock markets, which is nearly 50% compared to the 47 trillion won net purchases by individuals in the KOSPI market last year. The FSC plans to enhance investor protection by improving regulatory parity between domestic and international markets, such as mandating prior education for overseas futures and options investments.

Sanctions against unfair trading will also be strengthened. The detection and monitoring system for illegal and unsound activities in the securities market will be reinforced, and fines will be introduced for unfair trading.