Lee Bok-hyun "Securities Firms Must Be Thorough in Managing Real Estate PF Risks"

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), urged major domestic securities firms to prepare for potential risk factors related to real estate project financing (PF).

Financial Supervisory Service Governor Lee Bok-hyun attended the 'FSS Governor-Securities CEO Meeting' held on the 2nd at the Korea Financial Investment Association in Yeouido, Seoul, and is heading to his seat after a commemorative photo. Photo by Yoon Dong-joo doso7@

At a meeting with securities company CEOs held on the 2nd at the Korea Financial Investment Association, Governor Lee stated, "In preparation for potential risk factors such as the realization of real estate PF defaults and the recurrence of instability in the short-term funding market, I ask you to thoroughly inspect risks and firmly establish effective contingency plans to ensure meticulous risk management."

The meeting was attended by 14 securities company CEOs, including Seo Yoo-seok, Chairman of the Korea Financial Investment Association, Choi Hyun-man, CEO of Mirae Asset Securities, Jang Seok-hoon, CEO of Samsung Securities, and Kang Sung-mook, CEO of Hana Securities.

Governor Lee also emphasized, "Currently, our economy urgently needs securities firms to fulfill their fundamental role of discovering, investing in, and nurturing innovative companies and startups with high growth potential." He added, "Please support efforts to enhance the vitality of the real economy by shifting away from the previously concentrated real estate investment business model and focusing more resources on strengthening high value-added business capabilities through investment banking (IB) operations."

He further requested active participation in discussions to improve deposit usage fees and stock lending commission rates. Governor Lee said, "Please pay special attention to discussions on improving the calculation practices of deposit usage fees, stock lending commission rates, and credit loan interest rates, which are closely related to investors' rights and interests," and added, "Please also work to enhance the objectivity and reliability of research reports from domestic securities firms."

He emphasized prioritizing the management of liquidity and soundness risks. He promised comprehensive reform of the Net Capital Ratio (NCR) system and improvements to the liquidity risk management framework reflecting stress scenarios.

Governor Lee also called for efforts to enhance the competitiveness of the securities industry. He said, "I ask you to continuously strive to improve competitiveness through the development of innovative financial investment products, discovering initial public offerings (IPOs) that will become future growth engines of Korea, and expanding into new business areas such as token securities issuance and distribution services." He added, "The FSS will promote various competitions within the capital market by introducing Alternative Trading Systems (ATS) and will also work to advance market infrastructure."

Chairman Seo also expressed deep agreement with the recognition of the need for proactive responses to risk factors in the financial industry and crisis management. He stated, "We will respond to market uncertainties through proactive risk management that considers changes in market conditions."

He further added, "It is time for securities firms not to remain only domestic but to leap forward through active overseas business expansion," and requested, "Please provide institutional support so that securities firms can smoothly expand their businesses abroad."

The 14 securities company representatives attending the meeting pledged to focus on restoring trust in the capital market and stabilizing the market, suggesting that various support measures are needed for the securities industry to grow to a global level.

First, to prepare for tightening conditions in the short-term funding market, they emphasized the need to expand the capital strength and role of securities finance to provide liquidity stably. They also requested allowing corporate payment settlements and expanding the scope of foreign exchange operations to promote competition with banks. They noted the urgent need for legislation to activate trust products such as comprehensive property trusts to meet the demands of an aging society.

The FSS plans to prioritize these issues considering their importance and urgency and to promote them positively. For matters requiring institutional improvements, the FSS intends to closely coordinate with related agencies such as the Financial Services Commission.

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