Hwang Seong-yeop, the chairman of the Financial Investment Association, expressed deep concern on November 11 regarding the Fair Trade Commission's sanctions against government bond dealers. He stated, "I am worried that these sanctions may dampen the role of government bond dealers, ultimately leading to burdens on national financial procurement and market stability."
While acknowledging the need for a fair market order, Hwang emphasized, "We will strive to establish a fair market order and strengthen internal controls as a result of this matter." He added, "Moving forward, we will do our best to ensure stable development of the government bond market and restore trust in the financial investment industry through close communication with the government and related agencies."
The Financial Investment Association expressed concerns about the severity of the sanctions announced by the Fair Trade Commission regarding the collusion of 15 government bond dealers, warning of serious adverse effects.
The fines imposed on major securities firms include: KB Securities 332.178 billion won, NH Investment & Securities 242.785 billion won, Mirae Asset Securities 214.830 billion won, Shinhan Investment Corp. 147.306 billion won, Daishin Securities 120.051 billion won, Samsung Securities 118.860 billion won, Kiwoom Securities 83.813 billion won, Meritz Securities 64.562 billion won, Korea Investment & Securities 37.990 billion won, and Kyobo Securities 13.735 billion won.
The association emphasized that government bond dealers play an active role in the issuance and distribution of government bonds, contributing to the smooth procurement of the national budget. They explained that excessive sanctions could undermine the roles and functions of these dealers.
They particularly expressed deep regret over the possibility that sanctions could lead to the suspension or cancellation of dealer qualifications, which could significantly hinder government bond issuance.
The association also pointed out the potential impact on Korea's external credibility following its inclusion in the World Government Bond Index (WGBI) in April, noting that large-scale sanctions against government bond dealers could harm Korea's international standing as foreign investment flows in.
Concerns were also raised about the impact on securities firms' operations. The association believes that fines amounting to hundreds of billions to trillions of won and potential criminal charges could severely restrict the liquidity of these firms, potentially stifling their core business activities and hindering new approvals, thereby diminishing the global competitiveness of the capital market.
The Financial Investment Association reaffirmed its stance that the level of sanctions and the calculation of fines are excessive. They plan to actively support the industry's response to clarify the issues with the sanctions and the irrationality of the fine calculations through legal procedures such as administrative lawsuits.
* This article has been translated by AI.
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