It was found that Toss Securities allowed investors to play the basic educational video required when opening a U.S. stock options account while hiding it from the screen.
Overseas options are high-risk products in which investors can lose their entire investment in a short period. As a minimum safeguard for investor protection, pre-education is provided to improve understanding of the product, but Toss Securities has effectively turned this education into a procedural formality.
On the 21st, during the process of opening an overseas options account at Toss Securities, when trying to leave the screen after playing the basic educational video, a prompt appears asking, "Shall we hide the basic educational video?" It is followed by the description, "Even if you hide it, the video will keep playing," along with a "Play while hidden" button. If you press the button, the educational video disappears from the screen but continues to play.
It is a setup where investors can complete the education by merely running out the playtime without actually watching the video. Since overseas options are high-risk financial investment products for which the financial authorities have mandated separate pre-education and even paper trading, controversy is expected over the effectiveness of this educational method.
According to the Korea Financial Investment Association's Regulations on the Business and Affairs of Financial Investment Companies, if a general individual investor wishes to start a new transaction in futures and options on a foreign exchange, the financial investment company must require and verify completion of at least one hour of pre-education on derivatives and at least three hours of overseas derivatives paper trading.
Financial companies must also establish internal standards for education and paper trading, taking into account investors' risk profiles and experience.
However, the current rules only require investors to "complete" a certain amount of education time and do not specifically mandate a method that forces the video to remain on the front of the screen while being watched. That means it is hard to conclude that Toss Securities' "Play while hidden" feature directly violates the rules.
Still, critics say it does not align with the intent of the system, which is to ensure that investors fully understand the structure and loss potential of high-risk products before investing.
Toss Securities also rates the risk of overseas derivatives at the highest level. In Toss Securities' overseas derivatives transaction disclosure, U.S. stock options and the like are classified as grade 1 products that carry "very high risk." It also notes that options can fluctuate significantly in price with only small movements in the underlying stock due to leverage, and that if the investment direction is wrong, investors can lose their entire principal in a short period.
This is not the first time questions have been raised over investor protection for overseas options at Toss Securities. In November last year, when launching its overseas stock options service, it faced criticism for encouraging high-risk investing by prominently advertising on a paper-trading page that if the underlying stock rose 5%, the option price could jump 200%.
At the time, the Financial Supervisory Service instructed the Korea Financial Investment Association to review the ad, saying it could mislead investors, and Toss Securities temporarily suspended the options paper-trading page and the additional pre-registration event.