On November 11, the Fair Trade Commission announced the results of its investigation into collusion among primary dealers (PDs) in treasury bond bidding, prompting a fierce backlash from the securities industry. Firms expressed outrage not only over the scale of the fine, which amounts to 1.6 trillion won, but also over the commission's refusal to consider the unique circumstances of their operations. As a result, there are discussions within the industry about potential administrative lawsuits against the commission and even the possibility of withdrawing from PD participation.
The financial investment sector has stated that it cannot accept the commission's fine. One industry representative noted, "Typically, collusion results in victims, but in this case, there are virtually no victims." They added that there were instances where firms submitted lower bids after sharing market outlooks and determining strong demand for bonds. The Ministry of Economy and Finance had also requested the commission to take such circumstances into account.
Securities firms plan to continue legal challenges against the fine through administrative lawsuits. There are also discussions about a coordinated response through the Financial Investment Association. An official from Company A stated, "It is excessive for securities firms to bear the majority of the fine in a public service role where profits are minimal," and expressed confidence that the commission's conclusions would not hold up in court.
This situation could lead to a prolonged legal battle. In the United States, after sanctions related to collusion in treasury bond bidding were imposed in 2015, affected financial institutions filed civil lawsuits, which took seven years to resolve.
Concerns have also been raised that some securities firms may actually withdraw from PD participation. If this sanction sets a precedent, firms might feel burdened by the risks associated with PD involvement. A decrease in PD participants could weaken competition in treasury bond bidding, potentially affecting the winning bid rates.
The financial investment sector has stated that it cannot accept the commission's fine. One industry representative noted, "Typically, collusion results in victims, but in this case, there are virtually no victims." They added that there were instances where firms submitted lower bids after sharing market outlooks and determining strong demand for bonds. The Ministry of Economy and Finance had also requested the commission to take such circumstances into account.
Securities firms plan to continue legal challenges against the fine through administrative lawsuits. There are also discussions about a coordinated response through the Financial Investment Association. An official from Company A stated, "It is excessive for securities firms to bear the majority of the fine in a public service role where profits are minimal," and expressed confidence that the commission's conclusions would not hold up in court.
This situation could lead to a prolonged legal battle. In the United States, after sanctions related to collusion in treasury bond bidding were imposed in 2015, affected financial institutions filed civil lawsuits, which took seven years to resolve.
Concerns have also been raised that some securities firms may actually withdraw from PD participation. If this sanction sets a precedent, firms might feel burdened by the risks associated with PD involvement. A decrease in PD participants could weaken competition in treasury bond bidding, potentially affecting the winning bid rates.
* This article has been translated by AI.
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