[Geumtuhyeop Election Interview①] Jeon Byeongjo "I will build a strong Geumtuhyeop... Regulatory redesign is necessary"

"Reestablishing the Status of the Geumtu Association"
"Need to Start Discussions on the Geumtu Tax"
"Public Offering Fund Taxation System is Unreasonable"

Editor's NoteAs uncertainty in the financial markets grows, the curtain rises next month on the election for the next chairman of the Korea Financial Investment Association, representing the domestic securities, asset management, and trust industries. The stock market has plunged relentlessly amid aggressive interest rate hikes worldwide, and concerns over liquidity tightening are escalating in the bond market, making this election one held under a sense of crisis. To select a figure who will fight for the industry engulfed in uncertainty for the next three years starting next year, industry interest has already heated up. As of the 31st, a total of five candidates have entered the race, and Asia Economy conducted interviews with the chairman candidates to hear their statements of candidacy.

[Asia Economy Reporter Hwang Yoon-joo] "I will restore the status of the Korea Financial Investment Association. The financial investment industry’s regulatory framework also needs to be redesigned."

This was the opening declaration of Jeon Byung-jo, former CEO of KB Securities. Throughout the interview, he emphasized a ‘strong Financial Investment Association.’ Jeon said, "The Korea Financial Investment Association is an interest group that pursues the interests of its member companies," adding, "It must be clearly recognized, and the person elected as chairman should be someone who will work hard for the member companies." The prevailing industry consensus on the current association, according to him, can be summarized as a ‘diminished status, quiet association.’

Jeon is a graduate of the 29th Administrative Examination. He has served at the Ministry of Strategy and Finance, Ministry of Oceans and Fisheries, and as an administrative officer at the Presidential Secretariat, and was responsible for corporate finance (IB) at NH Investment & Securities and KB Investment & Securities. The phrase ‘a figure who has experienced both public and private sectors’ is often used to describe him. For this reason, he is regarded as someone who can convey the industry's voice to financial authorities as it is.

His first topic was ‘regulation.’ He stressed that the ‘sitting down to tailor a suit’ style of regulation is no longer acceptable for a strong Financial Investment Association. Jeon said, "Requests to improve regulations without a financial investment development strategy are like ‘sitting down to tailor a suit,’" and pointed out, "Instead of asking to reduce the number of parking enforcement (regulations), we should fundamentally consider why parking enforcement is conducted."

He emphasized, "It is not enough to just ask financial authorities for deregulation," adding, "We must first establish a vision for the direction the financial investment industry should take and redesign regulations accordingly."

Jeon believes that matters regulated by administrative rules should be relaxed to self-regulation. He said, "Eighty percent of regulations are made through administrative rules," and added, "Generally, administrative rules for administrative uniformity should be relaxed into self-regulation." Since the industry knows the market best, unnecessary regulations cause adverse effects.

Regarding the introduction of the Financial Investment Income Tax (Financial Investment Tax), he said, "Now is an appropriate time to discuss it." He explained, "Unreasonable aspects such as the major shareholder requirement of over 10 billion KRW, profit and loss integration, and five-year carryforward deduction for losses have been resolved, and there are meaningful aspects for investors," emphasizing, "Many people are currently experiencing investment losses, and the securities industry also hopes for a quick decision, so now is the right time to discuss it."

If the Financial Investment Tax is introduced, taxes must be paid on income exceeding 50 million KRW annually from stocks, bonds, funds, derivatives, etc., regardless of major shareholder status. It was scheduled to be implemented next year, but the current government and ruling party decided to postpone the introduction by two years. Under the current Income Tax Act, ‘major shareholders’ who hold more than 1 billion KRW in listed stocks or have a certain shareholding ratio (1% for KOSPI, 2% for KOSDAQ, 4% for KONEX) must pay 20% tax (25% for taxable income exceeding 300 million KRW) on capital gains from stock transfers. Others only pay securities transaction tax.

He also presented pledges for the asset management industry. He stated that the taxation system for public offering funds should be rationally revised. He pointed out, "Currently, public offering funds are disadvantaged in terms of long-term investment, diversification, and indirect investment under the tax system," adding, "If profits are made through long-term investment, dividend income tax and comprehensive income tax must be paid simultaneously."

Meanwhile, the Korea Financial Investment Association plans to hold an extraordinary board meeting as early as the 9th to discuss the schedule for the 6th chairman election, including the formation of the candidate recommendation committee (hereinafter referred to as the CRC). Voting will be conducted by CEOs of regular member companies (59 securities firms, 308 asset management firms, 14 real estate trust companies, 4 futures companies, totaling 385 companies), and voting rights vary according to membership fee contribution rates.

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