Vice Chairman Son Byung-du: "Measures to Stabilize ELS Issuance Scale and Operations to Be Prepared Soon"

[Asia Economy Reporter Park Jihwan] Financial authorities have decided to temporarily ease the regulation on cash-equivalent asset holdings for sellers of RP (Repurchase Agreement) bonds, which will take effect from the 1st of next month. They also plan to soon establish measures to stabilize securities firms' fundraising and management, including the total issuance volume of equity-linked securities (ELS).

On the 18th, Sohn Byung-doo, Vice Chairman of the Financial Services Commission, stated at the 'Financial Situation Review Meeting' held in the FSC conference room at the Government Complex, "We will prepare measures soon after sufficient discussions with the industry regarding the total issuance volume of ELS by securities firms and related matters."

Vice Chairman Sohn diagnosed, "As market liquidity increases and the pursuit of returns intensifies due to low interest rates, investors' interest in derivatives is also rising."

Additionally, amid recent market volatility, a large number of ELS products with high loss risks and high offered yields are being launched. Vice Chairman Sohn emphasized, "We are closely examining whether there are any issues in investor protection procedures during the advertising or sales of such products."

He stressed the need to strengthen inspections not only on the risks borne by individual investors but also on the soundness of financial companies.

Vice Chairman Sohn pointed out, "Real estate investments are large in scale, difficult to redeem early, and carry the risk of a downturn in the real estate market, which can affect the soundness of securities firms." Accordingly, plans are in place to strengthen monitoring of securities firms' overseas real estate investments.

Vice Chairman Sohn emphasized, "We will have securities firms conduct self-inspections and strengthen risk management by focusing on monitoring the 2.6 trillion won maturing this year."

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