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(Seoul=Yonhap Infomax) Gyeong Eun Park – South Korea’s financial authorities convened the fourth meeting this year of the “Unfair Trading Investigation and Deliberation Agencies Council” (JOSHIMHYEOP), reviewing the achievements of the joint response task force established to eradicate stock price manipulation and assessing the implementation of measures to curb unfair trading practices.
The Financial Services Commission (FSC), the Prosecutors’ Office, and Korea Exchange (KRX) held the fourth JOSHIMHYEOP meeting on the 25th to discuss key issues related to unfair trading in the capital markets.
In previous meetings, the council had deliberated on practical measures to eliminate unfair trading in the capital markets.
JOSHIMHYEOP serves as a collaborative platform where agencies responsible for detection, deliberation, investigation, and prosecution of unfair trading share updates and identify areas for enhanced cooperation.
The council first reviewed the status of implementing the action plan to eradicate unfair trading. In line with this plan, the FSC, Financial Supervisory Service (FSS), and KRX established a joint response task force within the Korea Exchange to strengthen the initial response capabilities of the Market Surveillance Committee.
Since its launch, the joint task force has uncovered two major cases: the first involving high-net-worth individuals (“super-rich”) and the second implicating a senior executive at a securities firm. Actions such as search and seizure operations and payment suspensions were taken in response.
Additionally, amendments to the Capital Market Investigation Regulations have been enacted to allow for fines exceeding the amount of illicit gains, and sanctions for unfair trading by financial institution employees have been toughened. In September, for the first time since the introduction of the three major unfair trading penalty systems, fines were imposed and illegal profits actively recovered.
Furthermore, regulatory amendments have provided the legal basis for KRX to shift its market surveillance system to an individual-based approach, enhancing the speed and efficiency of market monitoring and analysis.
Authorities plan to continue swiftly executing various administrative sanctions and pursuing follow-up measures on an ongoing basis.
The council also discussed ways to sustain the achievements of the joint response task force. Participating agencies agreed on the need for continuous reinforcement of investigative personnel, capabilities, and infrastructure to strengthen sanctions against unfair trading and shift market perceptions.
There were also calls to improve the effectiveness of search and seizure operations and payment suspensions. Detailed improvement measures will be discussed with the Ministry of Justice, the Prosecutors’ Office, and other relevant agencies going forward.
The results of KRX’s individual-based market surveillance system were also shared. After about a month of operation, the effectiveness of KRX’s surveillance activities was found to have significantly improved.
When the same individual trades through different platforms such as MTS (Mobile Trading System) and HTS (Home Trading System), the individual-based surveillance system is applied, and preventive measures against fictitious trading have been implemented. At the market surveillance stage, the scope of linked accounts for the same individual has been expanded, and this is actively used to analyze the likelihood of unfair trading based on participation rates and trading patterns. In the deliberation process, analysis of 12 accounts belonging to a financial institution executive confirmed violations of the short-swing profit return obligation, and the relevant suspicions were reported.
Meanwhile, participating agencies agreed to further strengthen close cooperation to enhance fairness and transparency in the capital markets.
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gepark@yna.co.kr
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