Financial Supervisory Service and Korea Exchange to Conduct Comprehensive Audit After 10 Years... Will It Fail Again?

Son Byung-du, Chairman of the Korea Exchange, is speaking at the 'KOSPI 3000 Breakthrough Commemorative Capital Market CEO Roundtable' held on the 14th at the Korea Exchange Grand Conference Room in Yeouido, Seoul. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Ji Yeon-jin] The Financial Supervisory Service (FSS) is planning to conduct a comprehensive inspection of the Korea Exchange (KRX) this year. A comprehensive inspection of the exchange has not been conducted since 2010.

According to financial authorities on the 30th, the FSS submitted a plan for a comprehensive inspection of the exchange this year. Initially, this plan was expected to be discussed at the regular meeting of the Financial Services Commission (FSC) held on the 31st, but it was not put on the agenda. An FSC official said, "Discussions are still ongoing," and added, "It is uncertain whether it will be included in the agenda for the next regular meeting."

The exchange was removed from the list of public institutions in 2015 and only undergoes inspections by the FSS upon request from the FSC. The last comprehensive inspection by the FSS was in 2010 when the exchange was still a public institution. The FSS also attempted to conduct a comprehensive inspection of the exchange last year, but it was canceled due to a lack of agreement with the FSC. Past audits by the Board of Audit and Inspection pointed out issues such as inefficient management and excessive fees.

The exchange was designated as a public institution in 2009, making it subject to audits by the Board of Audit and Inspection. Although the FSC announced the introduction of Alternative Trading Systems (ATS) in 2013 to break the exchange's monopoly, which removed the reason for its designation as a public institution, the delisting was postponed once that same year when the exchange was selected as a focus management target for inefficient management.

Within the industry, there have been criticisms that the FSC has been lukewarm about conducting comprehensive inspections of the exchange, as former FSC officials have served as chairpersons of the exchange, suggesting a form of preferential treatment. Son Byung-du, the current chairperson of the exchange, served as the FSC's vice chairman until November last year and became the exchange chairperson in December of the same year.

Previously, Park Yong-jin, a member of the Democratic Party of Korea, proposed an amendment to the Capital Markets Act last year to include the exchange under the Board of Audit and Inspection's audit scope, stating, "Since the ATS has not been introduced, the exchange maintains a monopoly position and enjoys privileges by not undergoing national audits or Board of Audit and Inspection audits." At that time, the FSC opposed the proposal, stating, "There is no precedent for designating institutions without state investment or budget support, other than public institutions, as subjects of the Board of Audit and Inspection's audits."

This content was produced with the assistance of AI translation services.