Press Releases - Financial Services Commission

Press Releases

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Oct 27, 2020

FSC Introduces New Rules on Financial Consumer Protection

The FSC introduced a proposal of an enforcement decree to provide details of the newly enacted legislation on financial consumer protection (“the Act” hereinafter), which is scheduled to go into effect on March 25, 2021.1 The proposal will be available for public notice and comment for forty days from October 28 until December 6.KEY MEASURES(SCOPE OF APPLICATION) The Act stipulates that financial products offered by banks, insurance companies, financial investment firms, specialized credit finance companies and savings banks will become subject to the new law. The proposal includes financial products offered by the Credit Union, P2P lending firms and registered private lenders.(ENTRY REQUIREMENT) The proposal establishes business registration requirements for both loan sales agents and independent advisory service providers. For both categories, online service providers are required to install an algorithmic program designed to prevent conflicts of interest for consumers.(INTERNAL CONTROL REQUIREMENT) In principle, all financial service providers are required to have internal control standards on financial consumer protection with the exception of small firms with less than five regular employees. Financial service providers should regularly improve their internal control standards if and when indicated by the regulators. The internal control standards should include the current best practice guidelines on financial consumer protection.2(SALES REGULATIONS) This proposal specifies rules improvements and introduces additional regulations that are necessary for the implementation of the six major sales regulatory principles under the Act.(CONSUMER RIGHTS) The Act introduces new safeguards by guaranteeing consumers the right to withdraw subscription and terminate unfair agreements, while delegating the scope of application through an enforcement decree. In this regard, the right to withdraw subscription applies to all loan and guarantee products in principle and the
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Oct 21, 2020

FSC Designates KFTC as Central Registry for P2P Transactions Data

The FSC announced its decision to designate Korea Financial Telecommunications Clearings Institute (KFTC) as the central registry responsible for storing and managing data on P2P financing transactions on October 21.KFTC will set up the computer and IT systems necessary to start functioning as the central registry on P2P transactions beginning on May 1, 2021. All information regarding P2P lending transactions will be stored and managed by KFTC. In addition, KFTC will be tasked with monitoring and managing the P2P lending and investment caps as prescribed by the Online Investment-linked Finance Act. The financial authorities will work to ensure that the central registry is ready to perform its duties as scheduled starting from May 1, 2021 and continue to closely supervise the sound development of the P2P lending sector.* Please refer to the attached PDF for details.
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Oct 21, 2020

3rd Digital Finance Meeting Unveils Ways to Advance Open Banking System

Vice Chairman Sohn Byungdoo presided over the 3rd consultative body meeting on digital finance on October 21 and introduced ways to further advance the open banking system and discussed concerns of both fintechs and big techs amid a rapidly changing digital environment.The following is a summary of Vice Chairman Sohn’s remarks.OPEN BANKINGOpen banking is an essential infrastructure in the era of digital finance. Many countries have already established the necessary legal frameworks that promote a further advancement of the open banking system. In Korea, open banking was launched in December 2019 and the number of users grew rapidly ever since with both banks and fintechs taking advantage of the vast opportunities provided by open banking to come up with new innovative solutions. As open banking has established itself as a critical digital payment infrastructure, the government will promote a further advancement of the open banking system to make it a hub of digital payment infrastructures.I. BOOST SCALABILITYThe key to open banking is opening up the traditionally exclusive accounts data and payments networks to financial enterprises and fintechs to promote the development of more innovative financial services. In this regard, the government will work to open up the open banking system to more market players beyond the banking sector and fintechs. Financial investment and mutual finance companies will be able to join open banking in December this year and credit card companies by the first half of 2021. Moreover, the government will work to allow more account types to be eligible to sign up for open banking and to connect open banking with other digital finance infrastructures such as MyData and MyPayment to promote the development of a one-stop platform offering analysis, advise and account transfer services all from the same place.II. PROMOTE RECIPROCITYIn order to promote reciprocity between incumbents and new entrants, the government will promote a more balance
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Oct 20, 2020

Vice Chairman Stresses Importance of Steady Financial Support for Small Businesses

Vice Chairman Sohn Byungdoo held the 26th financial risk assessment meeting via teleconference on October 20 to discuss the implementation status of the COVID-19 emergency financial support programs.The following is a summary of Vice Chairman Sohn’s remarks.(CURRENT ECONOMIC CONDITIONS) As some of the key economic indicators have shown signs of an improvement recently, the IMF revised up its global growth forecast from a 5.2 percent drop to 4.4 percent decline. The Korean economy also has been on a recovery path, as exports rebounded in September for the first time since the outbreak of the COVID-19. The recently adjusted social distancing rules and the government’s fiscal efforts are expected to help boost domestic demand. With a resurgence of COVID-19 being the biggest threat to economic recovery, financial institutions should closely adhere to the safety and preventive measures.(STEADY SUPPORT FOR SMALL MERCHANTS) The structural changes caused by the COVID-19 pandemic present both challenges and opportunities. Although there are positive effects, such as a transition toward a digital and green economy, heavier burdens may be placed on the vulnerable groups including small merchants as some expect to see a K-shaped recovery. Since the improvements to the second round of financial support program for small merchants became available on September 23, the provision of lending support to small merchants has continued to increase. As this program is backed by guarantees from the Korea Credit Guarantee Fund, it is essential that lending support is made available to small merchants with different credit backgrounds, including those with unfavorable credit history.With growing numbers of small merchants experiencing business closures, it is necessary to keep in place a policy that supports their comeback. Since last November, the FSC has made available a one-stop consulting program for self-employed small business owners who have experienced business closures due to t
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Oct 19, 2020

FSC Introduces Improvements to Credit Recovery Support Programs

The FSC announced ways to improve the credit recovery support system on October 16. The improved measures are expected to go into effect in November this year.The FSC has been working to improve the personal debt adjustment program run by the Credit Counseling Recovery Service (CCRS) to help reduce excessive personal debt service burdens and support quick recovery. In this year, the government introduced loan deferment programs in March and April to help relieve debt burdens of vulnerable individuals hit by the COVID-19. In order to improve the credit recovery support system, the FSC prepared the following measures.a. CCRS’s up to one-year loan deferment program currently offered to those who have seen their income drop due to COVID-19 will be extended to include those who have been laid off and/or experienced business closure.b. The age limit for CCRS’s special debt adjustment program for the unemployed youth with overdue debts of three months or more will be increased from below 30 years old currently to 34 years old and below, while extending the deferment period from maximum four years to five years.c. Improvements will be introduced that will restrict creditor institutions from denying loan deferment on non-overdue loans or activate a trigger clause for events of default just because a debtor applies for a debt adjustment.d. Improvements will be made to allow creditor institutions to cancel account seizures upon debtors’ request when entering into a debt adjustment program.e. Special exemptions for vulnerable debtors will be applied to all basic income recipients and those with severe disabilities.f. The current six-month term restriction placed before a debtor can reapply for an individual workout will be shorten to three months to help with quick recovery.g. For the portion of the principal that has been repaid, the remission rate on interest will be increased from 80 percent to 90 percent to help reduce debt servicing burden of vulnerable debtors.h. Su
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Oct 19, 2020

FSC Holds Kick-off Meeting to Root Out Unlawful Trading Activities in Stock Markets

Vice Chairman Sohn Byungdoo held a kick-off meeting of the task force on the prevention of unlawful and unfair trading activities in stock markets on October 19. The task force will operate until the end of March 2021 and regularly report its implementation status on a monthly basis.The following is a summary of Vice Chairman Sohn’s remarks.BACKGROUNDDue to the rapid spread of COVID-19 around the world, domestic stock markets plunged at the beginning of the year. However, stock prices quickly recovered to the pre-pandemic level backed by the strong fundamentals of the Korean economy, prompt implementation of the emergency financial support programs and the effective K-quarantine measures. Moreover, an upsurge in the trading volume by retail investors also contributed to the quick market recovery. The retail investors’ growing interest in stock investment is a positive sign. However, without a fair market order, investors’ trust in the market may crumble and the recent investment boom may end up as a short-lived one, preventing a further advancement of stock markets.With abundant market liquidities flowing into stock markets, it has become all the more necessary to pay attention to the growing concerns about illegal and/or unfair trading activities in the stock markets.POTENTIAL ISSUESThe recent trends in stock market activities reveal the following three potential problems. First, due to the rising market volatility, there are growing risks of unfair trading activities surrounding particular groups of stock items, such as COVID-19 and “untact” sectors. In addition, as the period of short-selling ban was extended until March 15, 2021, it has become necessary to closely monitor illegal short sale activities during this period, including naked short-selling. Second, unfair trading activities including price manipulation are being carried out in a more organized and complex manner. However, the current system from the detection to punishment stage takes a long
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Oct 15, 2020

Mobile Microloan Application to be Available for Young Adults

The FSC announced the availability of mobile microloan application system for young adults starting from October 30. Both first-time and returning applicants will be able to use the mobile application system and submit applications online via a mobile app from the Korea Inclusive Finance Agency.The “sunshine loan for youth” program was launched in January this year to provide financing support to young adults who face difficulties in accessing traditional lending institutions. Since January, it has provided KRW135.2 billion in microloans to some 38,000 young adults.With the third supplementary budget, the fiscal resources allocated for the program has been expanded from KRW100 billion to KRW200 billion. In addition, special guarantees became available for the program from August 18, which raised the maximum lending cap per application from KRW3 million to KRW5 million.The “sunshine loan for youth” program with special guarantees will continue to be offered until the end of this year with the mobile application service being available from October 30.* Please refer to the attached PDF for details.
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Oct 14, 2020

Government Reviews Financial Policy Agenda for Post-pandemic Era

Vice Chairman Sohn Byungdoo held the 25th financial risk assessment meeting via teleconference on October 14 and reviewed financial policy tasks for the post-pandemic era. The policy agenda focuses on four key areas—(a) supporting innovation-driven growth, (b) promoting digital finance, (c) expanding support for inclusive finance and (d) ensuring stability in the financial system.The following is a summary of Vice Chairman Sohn’s remarks.(NEED TO PREPARE FOR POST-PANDEMIC ERA) In response to the pandemic-induced economic shocks, the government has provided emergency financial support for small merchants and businesses. However, the disruption caused by COVID-19 may be just beginning. With global supply chains being reshuffled, contactless, medical, bio and green industries are becoming more prominent. This type of restructuring is also inevitable in the financial industry. There are also growing concerns about a deepening wealth gap between the haves and the have-nots. Potential risks in financial sectors, such as growing appetite for riskier and higher yield products as well as rising debt, have been accumulating. These are all the reasons that financial policies should account for the preparation of the post-COVID-19 era.(FINANCIAL POLICY AGENDA FOR POST-PANDEMIC ERA) The policy agenda announced on July 24 includes (a) supporting innovation-driven growth, (b) promoting digital finance, (c) expanding support for inclusive finance and (d) ensuring stability in the financial system. First, with regard to the first policy agenda, the government has been providing targeted financial support to innovative and promising businesses. Under the government-wide initiative to develop a thousand innovative firms, a total of thirty-two businesses have been selected with KRW211.1 billion in lending support being provided to sixteen of them. In November, more than 168 additional firms in the future car, biochemical and high-tech medical device industries are expected to be se
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Oct 14, 2020

KRW1 Trillion-plus Fund to Promote Market-oriented Corporate Restructuring

The FSC announced that the second round of corporate restructuring fund in the amount of more than KRW1 trillion has already begun to make investments with an aim of fostering conditions to promote market-based corporate restructuring.BACKGROUNDCorporate restructuring led by creditor banks proved effective in improving the financial structure of companies and minimizing shocks to the market but had limits in boosting companies’ market values and improving their competitiveness. To address this problem, the government created the first round of corporate restructuring fund in August 2018 to boost effectiveness in corporate restructuring by making use of the abundant capital, expertise and creativity from the private sector. It helped mitigate investment risks and the corporate restructuring fund has been successful in attracting diverse fund management companies into the corporate restructuring market that is still at a nascent stage.CORPORATE RESTRUCTURING FUNDIn August 2018, the first round of corporate restructuring fund was set up with a KRW541.5 billion master fund. With matching investments from the private sector, twelve feeder funds were created in the amount of KRW1.7 trillion from which about KRW981.9 billion investments have been made via both blind pool funds and project pledge funds in SMEs and middle market enterprises in sectors ranging from shipbuilding to chemical to construction and heavy equipment to steel.Against this backdrop, the second round of corporate restructuring fund was launched in May 2020 with a KRW501.5 billion master fund. With private sector investments, the total size will exceed KRW1 trillion, and it has already begun to make investments in two companies.As such, the government will continue to work on the promotion of market-oriented approaches to corporate restructuring. It is expected that the corporate restructuring fund will serve as a stepping stone for establishing a more vibrant corporate restructuring ecosystem.* Please
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Oct 13, 2020

Household Loans, September 2020

The outstanding balance of household loans in all financial sectors rose KRW10.9 trillion from the previous month in September 2020 (up 6.8% year-on-year). The household loan balance increased KRW9.7 trillion in the banking sector and KRW1.1 trillion in the non-banking sector.By type, mortgage loans increased KRW7.1 trillion in September, growing KRW0.8 trillion from the previous month (up KRW4.4 trillion y-o-y). In the banking sector, jeonse loans rose KRW3.5 trillion while mortgage loans expanded KRW2.0 trillion. Mortgage lending by non-banks saw an increase of KRW0.4 trillion from the previous month. Other types of loans went up KRW3.8 trillion as credit-based lending by both banks and non-banks rose KRW3.0 trillion and KRW0.7 trillion, respectively.The financial authorities will closely monitor trends in household loans to prevent risks to the economy and draw up measures when necessary in close coordination with the relevant ministries.* Please refer to the attached PDF for details.
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Oct 07, 2020

Vice Chairman Discusses Importance of Steady Financial Support for SMEs and Small Merchants

Vice Chairman Sohn Byungdoo held the 24th financial risk assessment meeting via teleconference on October 7 and discussed the implementation status of COVID-19 financial support programs and other market conditions.The following is a summary of Vice Chairman Sohn’s remarks.(COVID-19 FINANCIAL SUPPORT) The latest COVID-19 emergency support programs announced in September have been operating smoothly. The second round of emergency loan program for small merchants began to provide support on September 23, with its recently increased lending cap and broadened recipient base. Since the improvements became effective, some KRW350 billion worth of loans were issued within a week with interest rates also falling compared to earlier periods. More numbers of small merchants chose to apply via contactless channels, which helped avoid long lines at lending institutions and prevent the spread of the virus.The hardship experienced by SMEs amid a persistent pandemic underscores the importance of having a strong and tightly-woven financial support system to help address their liquidity shortages. In this regard, the government has improved existing programs according the needs of the SMEs and middle market enterprises, thus responding to changing market conditions in a more flexible way. In terms of the COVID-19 P-CBO support, the government has decided to increase lending caps for companies and lower underwriting ratios for subordinated debt. These changes will begin to be applied with P-CBO issuances in October. In addition, the government has significantly improved the lending support program specifically targeted at the pandemic-hit SMEs and middle market enterprises on September 24, doubling lending caps, offering better interest rates and extending the support period.(HOUSEHOLD LOANS) In September, the growth of household loans from five major banks declined compared to the previous month. In particular, credit loans fell by about a half due to effective management by banks.
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Oct 06, 2020

Government Approves Revised Rules to Facilitate Accounting and Audit Reforms

The government approved the revisions to the Enforcement Decree of the Act on External Audit of Stock Companies during a cabinet meeting held on October 6. The revised rules will become effective on the day of promulgation.KEY DETAILS(a) Remove regulatory redundancies to help relieve burdens for companies(b) Establish a two-thirds quorum rule for decision making by the standard audit hours deliberative committee to help reflect more balanced opinions from both the company and the auditor(c) Rephrase the provision that specifies the standards of companies that are subject to external audit to help companies better understand those standardsEXPECTATIONThe government expects that these revisions will help relieve some of the regulatory burdens for stock companies and enable more balanced discussions between relevant stakeholders, which will help lay foundations for the beginning of the accounting and audit reforms.* Please refer to the attached PDF for details.
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Oct 05, 2020

Household Loans by Five Major Banks in September 2020

The outstanding balance of household loans by five major banks increased KRW6.6 trillion in September 2020, rising at a slower rate compared to the previous month (up KRW8.4 trillion).Mortgage loans rose KRW4.5 trillion in September, rising slightly faster than KRW4.2 trillion in August, while credit lending expanded KRW 2.1 trillion, declining from KRW4.0 trillion in the previous month.The financial regulators will continue to monitor the application of DSR on individual borrowers by lending institutions while working on the management of the household debt level. The authorities will closely monitor trends in household debt and take necessary measures in close coordination with other relevant ministries.* Please refer to the attached PDF for details.
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Oct 05, 2020

FSC Holds Meeting on Cyber Security of Financial Institutions

FSC Chairman Eun Sung-soo held a meeting with relevant authorities to review the cyber security conditions of financial institutions on October 4.At the meeting, the authorities announced that financial institutions are maintaining strong preparedness for responding to cyberattacks amid a series of DDoS attack attempts by overseas hacking groups recently. In this regard, the Financial Security Institute will continue to work to strengthen cyber security measures while enhancing cooperation with other relevant institutions, including internet service providers and KISA.The authorities also reviewed risk factors related to the system outage that occurred at the Tokyo Stock Exchange on October 1. The FSC expects that it will have no direct impact on domestic financial transactions when markets resume after the Chuseok holiday. In this regard, the Korea Exchange, KOSCOM and securities companies will conduct a joint inspection to guarantee the safety of computer systems in domestic stock markets.* Please refer to the attached PDF for details.
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Sep 24, 2020

FSC and FSS Sign MOU with Bank of Thailand

The FSC and the FSS signed a Memorandum of Understanding (MOU) with the Bank of Thailand on comprehensive cooperation in the areas related to the financial sector and innovation in financial services.The MOU provides a basis for mutual cooperation among the three institutions on experience sharing, technical assistance and exchange of information on matters pertaining to our respective functions such as supervisory model, operational mechanism and regulations on innovative financial services. These arrangements will help enhance supervisory efficiency and promote innovation under the evolving financial service landscape.The MOU entered into effect on September 24, 2020.* Please refer to the attached PDF for details.
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Sep 24, 2020

FSC Holds 2nd Consultative Body Meeting on Digital Finance

Vice Chairman Sohn Byungdoo presided over the 2nd consultative body meeting on digital finance on September 24 and discussed the current status of platform businesses entering the financial sector and their impact on the market as well as ways to improve the personal authentication and identity verification system in financial services.The following is a summary of Vice Chairman Sohn’s remarks.(PROMOTING FAIR COMPETITION) With a growing number of platform businesses launching convenient financial services, it has brought positive changes for financial consumers but also raised concerns about their impact on traditional financial companies. As such, it is important to create an environment where fair competition takes place between the newly entering platform businesses and the traditional financial institutions. With the aim of establishing a sound market order for both platform service providers and financial companies, the government will (i) work to set up rules that will ensure transparency, fairness and accountability from service providers, (ii) expedite discussions on data sharing among market participants while focusing on the importance of ‘informed consent’ and data privacy rights and (iii) draw up plans to level the playing field between platform service providers and traditional financial companies.(PERSONAL AUTHENTICATION AND ID VERIFICATION) In order to promote the application of innovative technologies in the personal authentication and identity verification system in financial services, the government will (i) lay foundations for the application of diverse types of innovative personal authentication and ID verification technologies, (ii) strengthen requirements for data safety and security in financial transactions and (iii) clarify the division of responsibilities between financial companies and service users during the authentication and ID verification process.The government expects that close communication and discussions between market reg
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Sep 24, 2020

FSC Adds 5 More 'Innovative Financial Services' to Regulatory Sandbox

The FSC added five more 'innovative financial services' to the regulatory sandbox on September 23, bringing the total number of designated services to 115 since the sandbox program was first launched on April 1, 2019.Five credit card companies (Shinhan Card, KEB Hana Card, Woori Card, KB Kookmin Card and Lotte Card) will be granted regulatory exemptions to provide small-sum overseas remittance services for non-residents or foreigners.The service is expected to be launched after March 2021. The government expects that the newly available service will improve consumer access to low-cost overseas money transfer services while promoting competition and innovation in the industry.* Please refer to the attached PDF for details.
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Sep 23, 2020

KRW1.5 Trillion in Special Guarantees for SMEs Made Available by 4th Supplementary Budget

The FSC announced the availability of KRW1.5 trillion more in special guarantees for SMEs suffering from pandemic-induced economic downturn as the National Assembly passed the 4th supplementary budget.The special guarantee program run by Korea Credit Guarantee Fund will offer the same level of benefits as the first round support—up to 95 percent guarantee products with discounted fee rates (0.3%p, maximum 1.0%) for up to KRW300 million—and provide an expedited application review process to ensure swift provision of support. SMEs hit by COVID-19 related economic downturn may apply.The government will work to ensure a seamless implementation of the extra budget to help businesses get through the crisis.* Please refer to the attached PDF for details.
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Sep 23, 2020

Vice Chairman Pledges to Stay Alert for Potential Risks in Financial Markets

Vice Chairman Sohn Byungdoo held the 22nd financial risk assessment meeting via teleconference on September 23 and discussed market conditions and issues concerning household loans, soundness of financial institutions and corporate credit situation with relevant authorities.The following is a summary of Vice Chairman Sohn’s remarks.(FINANCIAL MARKET CONDITIONS) The corporate bond and short-term money markets showing signs of liquidity crunch at the end of March have largely improved due to prompt market stabilization measures taken by the government. Market experts forecast that the current stability will continue throughout the end of September given sufficient liquidity in the market. However, as there are potential risks related to COVID-19, relevant authorities should continue to closely monitor markets. The financial authorities will work to prevent an end-of-quarter credit crunch through various market stabilization measures already put in place.With regard to stock market conditions, there are possibilities of rising volatility given uncertainties surrounding the US presidential election, US-China relations, etc. There are also concerns about a growing number of retail investors taking out loans to invest in stocks including in overseas stock markets where there may not be adequate information available to them. As such, retail investors should be well aware of the risks involved in overseas stock investment, and financial institutions should make sure that investor protection measures are closely being observed in this regard.(HOUSEHOLD LOANS) The recent spike in household loans was caused in part by rising demand for loans by those undergoing difficult situations. However, a recent trend reveals that high income earners with high credit scores are increasingly turning to credit-based loans. As such, lending institutions should closely review borrowers’ debt service capabilities and monitor concentration of excessive liquidity in property markets, etc.(S
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Sep 18, 2020

Civil Penalties to be Introduced on Unfair Trading Activities

The government seeks to introduce penalties on unfair trading activities of up to twice the amount of undue profits generated by engaging in unfair trading activities as a relevant revision bill to the Financial Investment Services and Capital Markets Act was proposed at the National Assembly.Under the current legal system, the acts of unfair trading activities, such as the use of undisclosed information, price fixing or unjust trading, are punishable via the criminal law system, which often takes a long time to prosecute due to a higher degree of burden of proof applied. As such, the proposed revision to introduce civil penalties will help with more prompt sanctions on unfair trading activities and improve market discipline in capital markets.KEY DETAILSThe proposed revision bill establishes a legal ground to impose penalties on undue profits made from engaging in unfair trading practices for up to twice the amount of undue profits gained. In the case that calculating such amount of undue profits is inappropriate, a penalty of up to KRW5 billion may be imposed.In terms of the process, the FSC will be able to charge penalties upon receiving investigation results from the Prosecution Service or in consultation with the Prosecution Service.The new civil penalty will be operated in close tandem with the existing criminal penalty system and thus avoid imposing penalties at excessive levels.The revision proposal also stipulates that the Prosecution Service may provide relevant documents concerning investigation upon request from the FSC.SCHEDULEThe revision bill is currently pending at the National Assembly for a legislative process. The government will support the enactment of the proposed bill.* Please refer to the attached PDF for details.
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