The Financial Supervisory Service asked brokerages to strengthen investor protection for high-risk overseas investment products.
On the 9th, the Financial Supervisory Service (FSS) held a meeting with chief customer officers (CCO) and compliance officers at securities firms and called for stronger internal controls and risk management related to investments in high-risk overseas financial products.
At the meeting, the Financial Supervisory Service (FSS) stressed that brokerages should establish a business culture that prioritizes investor protection over profitability and bolster risk management.
Before launching products, it told firms to strengthen ex-ante internal controls, such as analyzing the risk impacts of high-risk overseas products, and to expand guidance during the sales process on overseas capital markets and exchange rate volatility.
It also said that, in preparation for increased overseas market volatility, there is a need to reexamine the overall current risk management and performance compensation (KPI) systems to prevent excessive concentration in certain products, such as leveraged (borrowed) investments.
It requested restraint in advertising, saying excessive events and marketing around overseas stocks and derivatives could trigger overheated competition.
The Korea Financial Investment Association also plans to tighten advertising reviews related to financial product launches ahead of the implementation of an overseas derivatives education system on the 15th.
An official at the Financial Supervisory Service (FSS) said, "If on-site inspections find that investor protection management systems related to overseas investments are insufficient, we will guide securities firms to make immediate improvements."