Many Bills Pending in the National Assembly "Expect Legislative Interest... Active Support"
Focus on Protecting Minority Shareholders "Plan to Improve Treasury Stock System Within the Year"
Crackdown on Market Manipulation... Review of Overseas Alternative Investment Risks by Securities Firms and Funds
Kim So-young, Vice Chairman of the Financial Services Commission, is presenting the 'Key Policy Achievements in the Capital Market Sector and Plans for the Second Half of the Year' on the morning of the 17th at the Gwanghwamun Government Seoul Office.
The Financial Services Commission plans to maintain the three major policy directions?▲restoring investor confidence ▲strengthening the role of the capital market ▲financial stability?throughout the second half of this year, following the first half. In particular, since restoring investor confidence is a priority task for advancing the capital market, the Commission will focus on strict punishment for unfair trading. To this end, it plans to announce the 'Unfair Trading Response System Reform Plan' in the third quarter. Related agencies will work together to enhance capabilities to respond to increasingly sophisticated and intelligent securities crimes.
On the morning of the 17th, Kim So-young, Vice Chairman of the Financial Services Commission, held a press briefing at the Gwanghwamun Government Complex in Seoul to announce the 'Major Policy Achievements and Plans for the Second Half in the Capital Market Sector.' She stated, "The government will sincerely continue to promote the three major policies in the second half, focusing on the development of the capital market, and will also ensure that the policies announced so far are completed without any setbacks." She added, "Since many bills are pending in the National Assembly, we expect significant interest from the legislative branch and will actively support the discussion of these bills."
Focus on Protecting Common Shareholders
The Financial Services Commission will prioritize protecting common shareholders to restore investor confidence. Since the treasury stock system has been used not only for shareholder returns but also for treasury stock manipulation or securing friendly major shareholder stakes?leading to ongoing controversies over infringement of common shareholders' rights?the Commission plans to prepare an 'Improvement Plan for the Treasury Stock System of Listed Companies' within the year, balancing the need to protect shareholders and companies' demand for defense of management rights. However, the business community has expressed concerns that improving the treasury stock system could threaten management rights. Vice Chairman Kim emphasized, "We will improve the system with a balanced approach to alleviate the business community's concerns," but added, "Nonetheless, the most important thing will be the protection of common shareholders."
'Convertible bonds' will continue to function as a financing tool for small and medium-sized enterprises, and the Commission will also seek improvement measures to prevent their misuse in unfair trading.
To build capabilities to respond to increasingly sophisticated and intelligent securities crimes, the 'Unfair Trading Response System Reform Plan,' currently under review by related agencies, will also be announced in the third quarter. Vice Chairman Kim expressed expectations, saying, "As the method for calculating unjust profits becomes more concrete and is legislated, it will have the effect of deterring capital market crimes and reducing unfair trading."
Alongside preparing the unfair trading response system reform plan, the Commission will manage excessive concentration phenomena such as theme stocks to restore investors' trust in the value of stock investments based on corporate performance and prospects. Vice Chairman Kim said, "We will improve the provision of accurate information about theme stocks to investors, monitor whether securities firms' margin loan supply is appropriate, and strictly crack down on related market disruption activities." Regarding crackdowns on illegal leading chat rooms and pseudo-investment advisory businesses, she added, "The Financial Supervisory Service has established a dedicated team and plans to intensively crack down by the end of the year, and we expect results."
The principle of strict punishment for illegal short selling will also continue. Vice Chairman Kim emphasized, "Eradicating illegal short selling is an important task, and we will respond firmly." However, she was cautious about the full resumption of short selling. She explained, "While the full resumption of short selling should be achieved in the medium to long term, it is still difficult to specify the timing, and we need to assess market conditions," adding, "We will continue to promote improvements to the short selling system."
A Capital Market Befitting an Advanced Country
The Commission will also implement tasks to support the capital market in fulfilling new roles required by our economy, which has entered a mature stage. To this end, it plans to complete follow-up measures for the 'Improvement Plan for the Technology Special Listing System' within the second half of the year, supporting companies with core advanced technologies such as DeepTech to raise funds through listing and grow rapidly. The 'Unlisted Stock Trading Platform' will also be institutionalized based on the performance of related innovative financial services to date, with a plan to announce this within the year.
Through 'trust business innovation,' the Commission will strengthen the original customized professional and comprehensive asset management functions of trusts and establish an institutional foundation for innovative alternative investment products such as fractional investment. Additionally, remaining tasks to support corporate M&A, which enhances economic and corporate efficiency and dynamism, will be sequentially implemented. An 'ESG Disclosure System Roadmap' will also be prepared to contribute to ushering in the ESG finance era. Since ESG is an international agenda encompassing government, companies, regulation, and markets, the plan is to build a roadmap suitable for our circumstances.
Risk Assessment and Contribution to Market Stabilization
Efforts to solidify financial market stability will continue. Vice Chairman Kim stated, "We will improve the securities firms' net capital ratio (NCR system) related to real estate project financing (PF) to reflect the actual risks of projects rather than forms of fund supply such as loans and guarantees, and will closely examine overseas alternative investment risks of securities firms and funds." Accordingly, an improvement plan for securities firms' NCR related to real estate PF will be announced within the year.
She assessed that the domestic real estate PF would likely not be directly affected by the Chinese real estate crisis. Vice Chairman Kim said, "Since there has been no direct investment in Chinese real estate, we do not expect an impact on domestic real estate PF," but noted, "However, the real economy affected by the Chinese economy will inevitably be impacted, so that should be taken into account." Additionally, she mentioned, "There are concerns about individuals participating in overseas real estate funds more than institutions and corporations. However, only one fund matures this year, and since they are diversified, we do not expect the risk to expand."
The Commission will closely cooperate with the financial sector to ensure the smooth progress of recommended installment payments for retirement pension contributions, actively support the spread of this among public institutions (Ministry of Economy and Finance) and large corporations (Ministry of Employment and Labor), and closely monitor the fund trends in the retirement pension market at the end of the year.
Vice Chairman Kim emphasized, "The government is determined to solve the chronic problems of the capital market this time and bring about meaningful changes that the public can feel, and will continuously and actively promote related policies." She added, "Together with related agencies and the industry, we will continuously supplement to ensure that the already announced and implemented contents are firmly established in the market, while diligently discovering and actively improving new development tasks."
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