New Year Press Conference... Strengthening Market Stabilization Measures
Industry Support Including Securities-Backed Loans and RP Purchases
Contributing to STO Investor Protection... Enhancing ESG
[Asia Economy Reporter Lee Seon-ae] "In accordance with the economic policy direction announced by the government, we will continue to provide liquidity support to the securities industry using available funds during market crises."
On the 16th, Yoon Chang-ho, President of Korea Securities Finance, held a New Year's press conference in Yeouido, Seoul, explaining the major management directions for 2023 and reaffirming the commitment to strengthening Korea Securities Finance's role as a stabilizer in the capital market. This conference was the first face-to-face meeting since President Yoon took office in April 2021.
President Yoon stated, "To contribute to market stability, we plan to continue the 3 trillion won liquidity support program launched last year, the project financing asset-backed commercial paper (PF-ABCP) purchase program, and investment in the stock market stabilization fund," adding, "Korea Securities Finance plans to support the rapid reactivation of funds in case of increased stock market volatility to soothe investors' anxious sentiment and contribute to market stability."
Yoon Chang-ho, President of Korea Securities Finance, is explaining the main management goals for this year at a New Year's press conference held on the 16th. Photo by Korea Securities Finance
Since July last year, Korea Securities Finance proactively supplied liquidity worth 1.8 trillion won to securities firms. During the Legoland incident in October of the same year, as part of the government's 10.23 market stabilization measures, a 3 trillion won liquidity supply program was launched. Additionally, the collateral securities for securities-backed loans were expanded, and a commitment was made to invest 450 billion won in the PF-ABCP purchase organization established by the industry.
This year, in line with the government's economic policy direction, Korea Securities Finance plans to continue liquidity support of 3 trillion won, PF-ABCP purchases, and investment in the stock market stabilization fund using available funds. President Yoon said, "The money market has shown signs of calming since the end of last year, with CD rates falling below the base rate, and recently, as the tightening has eased, securities firms are repaying." He added, "Since the government is actively responding to the real estate PF market, I cautiously expect the short-term money market to stabilize."
Korea Securities Finance plans to supply funds tailored to securities firms' demand through securities-backed loans and repurchase agreement (RP) purchases during normal times. The budget for this year is set at 26.5 trillion won. In particular, the practical credit limits will be managed flexibly according to changes in securities firms' financing environment, such as the real economy.
Furthermore, Korea Securities Finance plans to pursue ▲providing highly competitive fixed deposit products to securities industry retirement pension operators ▲seeking expansion of liquidity supply resources ▲custody and management of token securities (STO) investor deposits ▲and practicing environmental, social, and governance (ESG) management.
First, regarding the retirement pension market, Korea Securities Finance currently provides fixed deposit products to 12 out of 14 securities industry retirement pension operators. President Yoon said, "With products that have high interest rate competitiveness and stability, we have contributed to the expansion of retirement pension reserves in the securities industry," adding, "This year, we will continue to provide competitive products to help the securities industry strengthen its competitiveness in the retirement pension market." The securities industry's retirement pension reserves increased by 11 trillion won from 63 trillion won in 2021 to 74 trillion won last year.
Through the operation of a task force (TF) within the year to diversify funding sources, Korea Securities Finance will seek to expand liquidity supply resources. In the mid-to-long term, it plans to accumulate experience in foreign currency liquidity procurement and management to establish a foundation for supplying foreign currency liquidity to the capital market. The Ministry of Economy and Finance announced a foreign exchange system reform plan that allows Korea Securities Finance to directly participate in the foreign exchange (FX) swap market to assist securities firms in foreign currency procurement and liquidity supply. President Yoon said, "It will take about 1 to 2 years (to directly participate in the swap market)," adding, "Once the legal amendments are completed, Korea Securities Finance will proceed with system development and contract signing procedures."
A management strategy to respond to digital transformation will also be established. Korea Securities Finance plans to create a digital-friendly work environment by building a smart workplace in line with the digital transformation (DT) era. First, it will introduce a paperless culture such as digitizing face-to-face documents and mobile offices, and create an environment where work can be performed without location constraints by building a cloud-based virtual desktop infrastructure.
Currently, investor deposits related to fractional investment platforms like Musicow are separately deposited with Korea Securities Finance through securities firms and are safely stored and managed. In the future, upon issuance and distribution of token securities, Korea Securities Finance plans to safely custody and manage investor deposits of token securities to contribute to investor protection. President Yoon explained, "Token securities will be treated the same as general stock investments, where investors open accounts with securities companies and deposit funds, which are then separately deposited with Korea Securities Finance. In the event of bankruptcy or unforeseen accidents, Korea Securities Finance will return the funds to investors, thereby contributing to investor protection."
Efforts to improve organizational culture and practice ESG management will also be undertaken. Korea Securities Finance has enhanced long-term personnel planning capabilities and expanded and reorganized the HR and compliance teams to strengthen systematic personnel management and internal controls. Additionally, through the regular personnel reshuffle in the first half of the year (February 1), personnel decisions were made focusing on job expertise and capabilities. President Yoon said, "By appointing many young and talented team leaders and placing excellent practical talents in the right positions, we have improved the organization's expertise and efficiency," adding, "We will continue efforts to improve organizational culture, including improving systems to strengthen job expertise and enhancing evaluation and compensation systems to motivate employees."
Finally, he said, "As part of the government's efforts to reduce greenhouse gas emissions and activate emission trading, it plans to introduce entrusted trading of emission rights to securities firms," adding, "Korea Securities Finance plans to review ways to safely custody and manage entrusted deposits for emission rights trading."
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