Jeong Eun-bo: "We Will Establish a Continuous Supervision System for Fund Setup, Sales, and Management by Asset Management Companies" (Comprehensive)

[Asia Economy Reporter Park Ji-hwan] Jung Eun-bo, Governor of the Financial Supervisory Service (FSS), announced plans to establish a comprehensive, continuous supervision system covering the entire process of fund establishment, sales, and management related to asset management inspections. He also emphasized that institutional improvements will be made to ensure that innovative products meeting diverse investor demands can be launched in a timely manner to revitalize public funds.

On the 2nd, Governor Jung and CEOs of the asset management industry held a communication session regarding supervisory and inspection directions and major issues at the Kensington Hotel in Yeongdeungpo-gu, Seoul.

Regarding the basic direction of supervision and inspection of the asset management industry, Governor Jung expressed his intention to adhere to laws and principles while striving for harmony and balance between preventive supervision and ex-post supervision. Specifically, considering the current uncertainties in domestic and international economic conditions, he emphasized focusing on proactive risk management and concentrating supervisory capabilities on strengthening financial consumer protection to restore investor trust.

Governor Jung stated, "To ensure the asset management industry maintains resilience even in crisis situations, we will induce potential risk management by preparing for increased volatility in interest rates and asset prices through measures such as liquidity stress tests." He added, "We will work to establish industry practices where private funds are treated as private, and public funds as public. Private funds for professional investors will reflect the unique characteristics of their management, and we will actively review improvement measures regarding regulatory arbitrage issues arising between private new technology associations and private funds."

In particular, regarding asset management inspections, he emphasized that financial authorities will focus on identifying vulnerabilities in advance and encouraging asset management companies to improve them independently. Governor Jung said, "To this end, the FSS will establish a comprehensive continuous supervision system covering fund establishment, sales, and management, and will promote the advancement of a continuous monitoring system based on IT technology and data."

Additionally, Governor Jung emphasized, "In a changing environment such as digital transformation and the expansion of alternative investments, we will support institutional improvements such as mergers, specialization, and shortening the licensing period for specialized asset management companies to strengthen competitiveness through the enlargement and specialization of asset management companies."

He also shared his thoughts on measures to revitalize the public fund market, which has recently been sluggish. Governor Jung said, "To revitalize public funds, we will provide institutional support such as operating a fast-track procedure for innovative product reviews to ensure that innovative products meeting diverse investor demands can be launched in a timely manner." He added, "We plan to provide maximum support for the sound growth of the asset management industry, including ensuring the smooth market landing of the restructured private fund system under the revised Capital Markets Act."

Finally, Governor Jung stated, "The asset management industry has high growth potential in the future, supported by the acceleration of asset accumulation of national income and increasing asset management demand according to the life cycle. We must devote ourselves to developing financial products and services that satisfy the investment demands of various classes and proactively manage consumer protection."

After the meeting, Governor Jung held a Q&A session with reporters on major issues in the asset management market. Regarding criticism that the full investigation of private funds is progressing slowly, he explained, "There are about 340 private fund companies, so conducting a full investigation is quite burdensome relative to our manpower. We are currently discussing additional manpower expansion with the Financial Services Commission. If necessary, we will consider flexible deployment of investigation personnel from the securities side."

The discussion also touched on the default option for retirement pensions, which was passed by the National Assembly the day before. The default option is an automatic investment system where financial companies manage defined contribution (DC) retirement pension assets on behalf of workers, who otherwise must directly instruct the management of their pension assets. It has attracted attention because it can actively manage retirement pensions, which have mostly been defined benefit (DB) plans, to improve returns. Governor Jung said, "Through this legislation, asset management companies can operate retirement pension assets more flexibly." However, regarding flexible operation of the retirement pension system, he noted, "Basically, asset management must be conducted within the framework of the Labor Standards Act, so it is difficult to exercise flexibility beyond the institutional framework."

Regarding the ongoing Korea Exchange inspection, he said, "Since the inspection is ongoing, it is difficult to comment specifically on what parts are being reviewed or what issues are being pointed out."

Meanwhile, the meeting was attended by Governor Jung, Na Jae-cheol, Chairman of the Korea Financial Investment Association, and CEOs from eight companies including Lee Byung-sung of Mirae Asset Global Investments, Shim Jong-geuk of Samsung Asset Management, Lee Hyun-seung of KB Asset Management, Kim Sung-hoon of Kiwoom Asset Management, Lee Kyu-sung of Aegis Asset Management, Song Sung-yeop of Timefolio Asset Management, Park Se-yeon of Suseong Asset Management, and Kim Kyu-chul of Korea Asset Trust.

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