The Financial Supervisory Service will send a CEO letter to the chief executives of securities companies regarding the causes and countermeasures related to computer malfunctions. This is to prepare a response due to the recent repeated computer malfunctions, which have caused investor losses and decreased trust in the domestic capital market.
On the morning of the 28th, FSS Deputy Director Ham Yong-il chaired a briefing on "the achievements and future plans for changes and innovations in the capital market" and noted, "We plan to send the 4th CEO letter to securities company CEOs today," adding, "The contents will include the types of computer accidents and countermeasures."
Recently, the domestic investment industry has experienced consecutive computer malfunctions in the securities trading system. In March, due to a computer malfunction at the Korea Exchange, trading in the KOSPI market was halted for 7 minutes, and some stocks were not traded for nearly 3 hours. In April, Kiwoom Securities experienced computer malfunctions for two consecutive days, causing delays in stock transactions three times, while Mirae Asset Securities and MERITZ Securities also halted stock transactions due to computer malfunctions.
The FSS has begun an investigation into the computer malfunctions at the Korea Exchange and Kiwoom Securities, and has sent a CEO letter to other securities companies to advise them to be cautious.
Deputy Director Ham stated, "Not all computer malfunctions at securities companies occur due to internal issues," adding, "However, it is ultimately a matter of customer trust, so securities companies need to self-reflect on this problem."
During the briefing, achievements such as the reestablishment of the balance of rights between controlling shareholders and common shareholders, enhancement of market efficiency, and establishment of market order were also disclosed along with the computer malfunctions at securities companies.
Particularly regarding the recent issues surrounding MBK and Homeplus, it was also noted that inspections of private equity fund (PEF) managers (GPs) would be expanded. Since introducing the authority to inspect PEF GPs in October 2021, the FSS has conducted inspections on 18 GPs to date.
The FSS announced that it plans to differentiate the scope and level of inspections by comprehensively considering the scale of investment, degree of legal compliance, and social responsibility, stating, "We intend to expand inspections of PEF GPs to more than five companies annually."
Deputy Director Ham explained, "PEFs have not been significantly highlighted as a social issue until now, but they are receiving considerable attention due to several recent issues," adding, "If problems arise in industries related to national key industries or those with many workers or clients, we will prioritize examining them."
He also mentioned that, "We will not only discuss the MBK issue, but also watch for problems related to the misuse of undisclosed information by PEF GPs."
In addition, the accomplishments of the paid capital increase priority review system were disclosed. The FSS has conducted a total of 14 priority reviews since the system was introduced, of which 12 companies were financially distressed, and 2 companies carried out large-scale increases exceeding 1 trillion won. Through the priority reviews, the FSS demanded rectifications regarding the justification for capital increases (12 cases), investment risks for distressed companies (12 cases), shareholder communication processes (10 cases), and corporate due diligence (9 cases).
Deputy Director Ham stated, "There are many accountability issues for securities companies, asset managers, PEFs, trust companies, and other key participants in the capital market from an industrial perspective," adding, "In the current situation of increasing inspections and sanctions, incidents and accidents are also on the rise."
He added, "For the domestic capital market to grow, all participants must step forward together," urging, "Investors should not be preoccupied with short-term revenue but should engage in mature investing through rational decisions, while securities companies and asset management companies should not be blinded by immediate profits and should fulfill their social responsibilities."