Securities firms decided to suspend new marketing for overseas investments. The financial authorities moved to apply pressure, citing the need to strengthen investor protection.
As the won-dollar exchange rate has risen recently against the U.S. dollar, increasing the burden of a high exchange rate, Korean retail investors trading U.S. stocks are being singled out as one of the causes fueling the high rate. Authorities are seen as turning to self-help measures in response.
According to the financial investment industry on the 18th, the Financial Supervisory Service held a meeting this morning with the heads of Mirae Asset Securities, Meritz Securities, Kiwoom Securities, and Toss Securities, the top four securities firms by overseas stock transaction share.
At the meeting, authorities emphasized that aggressive overseas investment marketing by securities firms amid a high exchange rate could lead to investor losses.
In particular, as securities firms have recently moved to attract customers by running various events for new sign-ups, such as offering overseas investment support funds and fee exemptions, questions were also raised over whether advertisements were excessively stoking investment demand.
Securities firms that attended the meeting decided to suspend, for the time being, new events or advertisements related to overseas stock investments.
They also plan to end early or wind down ongoing marketing, after legal review, to the extent that it does not pose problems.
The Financial Supervisory Service (FSS) will also hold an additional meeting in the afternoon with the heads of six major securities firms. It is expected to convey an industry-wide policy of refraining from marketing through the Korea Financial Investment Association.
That day, Lee Chan-jin, the Financial Supervisory Service (FSS) governor, held a financial situation review meeting before the roundtable, strongly rebuked securities firms' sales practices that prioritize performance over investor interests, and called for an active response.
Lee said, "We will expand the scope of the ongoing inspection of securities firms' overseas investment practices, and immediately switch to on-site inspections for any securities firm where problems are identified."
Meanwhile, the Financial Supervisory Service (FSS) has also begun inspecting the status of overseas investment sales since early this month. On the 3rd, starting with Korea Investment & Securities and NH Investment & Securities, inspections have been completed for six securities firms to date, and the scope will be expanded to asset managers going forward.