"Reducing Duplicate Sanctions and Disclosing Fine Criteria"... Korea Exchange Initiates Regulatory Improvements

Improvement of Detailed Rules for Sanctions... Effective from Next Month

[Asia Economy Reporter Minwoo Lee] Korea Exchange (KRX) is set to significantly improve regulations related to sanctions on member companies for rule violations. The plan is to operate transparently by disclosing related standards and to reduce overlapping sanctions with financial authorities.

The Market Surveillance Committee of Korea Exchange announced on the 27th that it will implement a comprehensive regulatory improvement plan containing these details.

First, the criteria and detailed procedures for imposing member sanctions fines will be disclosed. Although the existing detailed rules mentioned criteria for judging the cause and severity of violations, the specific practical guidelines used for judgment were not publicly available. Going forward, detailed judgment criteria and calculation procedures related to member sanctions fines, which were only applied in practical guidelines, will be reflected in and disclosed through the Market Surveillance Regulation Detailed Rules. Excessively complex and segmented violation judgment elements and criteria will be simplified, and similar or ambiguous standards will be clearly distinguished.

A dual sentencing standard dividing violations based on whether quantitative criteria apply will also be introduced. Until now, the reasons for judging the severity of results necessary to determine the sanction fine range were uniformly applied to all types of violations, but from now on, quantitative criteria will be established to differentiate them. For example, violations such as fictitious orders, involvement in expected transaction prices, and manipulation of opening/closing prices will be judged based on quantity, amount, frequency, and days of involvement.

Overlapping sanctions for the same violation will also be addressed. Previously, violations such as short selling infractions and prohibited acts like fictitious or collusive trading, which disrupt fair trade order, were subject to sanctions both by the Market Surveillance Committee and financial authorities. Going forward, a regulatory basis will be created to minimize overlapping sanctions such as fines from financial authorities and penalties from the Market Surveillance Committee for the same act.

The criteria for aggravating or mitigating disciplinary actions, including expanded mitigation, will be rationalized. Until now, the Exchange applied aggravation and mitigation of discipline separately for subjects (members, executives, employees). These standards will be revised. Sentencing mitigation for public or voluntary reporting will apply not only to employees but also to executives, and internal control evaluation results of companies will no longer be used as grounds for aggravating or mitigating executive discipline. Additionally, the scope of voluntary disciplinary actions will be reduced to strengthen regulatory effectiveness.

The Exchange plans to complete the revision of the enforcement detailed rules containing these changes and implement them starting from the 1st of next month. The new detailed rules will apply to violations occurring after this date. A Market Surveillance Committee official stated, "We will continue to pursue regulatory improvements to enable more reasonable and balanced sanctions while enhancing the rights and interests of members."

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