[Public Voices] 15 Years of the Capital Markets Act: Dreaming of a New Financial Big Bang

There is a joke that the reason neighboring countries cannot invade our country is because of "jung-2-byeong" (middle school syndrome). The atypicality, uncertainty, and dark history of adolescents going through the turbulent period of puberty are probably self-deprecating jokes that no one can handle. However, from the perspective of developmental psychology, adolescence around the age of 15 is an important period of growing pains in mind and body, preparing to become an adult.

This year marks the 15th anniversary of the Capital Markets Act. Enacted in 2007 with the aim of enhancing the value of the capital market through financial innovation, the Capital Markets Act introduced a comprehensive approach to financial products, allowed concurrent operation among financial businesses, and presented the vision of a "financial big bang" through a function-based regulatory system, leading to its implementation in 2009. However, the legislative process was not without difficulties. Excessive concerns were raised about the stability of securities firms' payment settlements. Various regulations were introduced under the pretext of preventing conflicts of interest.

Nevertheless, our capital market has grown quantitatively like a vigorously developing adolescent. The average equity capital of the five major securities firms increased from 2.3 trillion won in 2008 to 7.4 trillion won, and the total net asset value of funds surpassed 1,000 trillion won from 300 trillion won. Furthermore, the Capital Markets Act has continuously evolved in a direction that preserves its original legislative intent. The comprehensive financial investment business operator established in 2013 accelerated the birth of a Korean-style investment bank, and in 2020, principle-based regulations were partially introduced, such as the wall regulation for information exchange blocking devices. The establishment of an alternative exchange in 2013 and the two rounds of private fund system reforms in 2015 and 2021 are also considered major institutional improvements that enhanced market dynamism.

However, the explosive synergy dreamed of at the time of the law’s enactment, the so-called "financial big bang," remains elusive in the face of a stock index hovering in the mid-2000s, strengthened regulations due to various incidents and accidents, and the ongoing Korea discount debate.

Nonetheless, no one now doubts that the stability of securities firms’ settlement systems lags behind that of Saemaeul Geumgo or fintech companies, and public interest in financial investment products and the need for asset growth and management is higher than ever.

Above all, it is hopeful that the government has a strong will to revitalize the capital market. Recently, under the motto of "coexistent finance, expanding ladders of opportunity," the government has rolled up its sleeves to advance the capital market system. Perhaps now, when the government, market, and companies are contemplating in the same direction, is the optimal time for our capital market to grow one step further and increase its value.

Our capital market has yet to overcome atypicality, uncertainty, and dark history. Moreover, we must respond to major current issues that could not have been anticipated at the time of the law’s enactment, such as digital innovation including artificial intelligence (AI), the increase in non-face-to-face transactions, the need to improve private pension yields due to entering an aging society, and the enhancement of global competitiveness for expanding global territory, which is still insufficient. However, there is still opportunity. Having patiently endured the growing pains of mind and body, our capital market is now ready to become a physically and mentally healthy adult. If we wisely overcome this period, I am confident that the "financial big bang" dreamed of 15 years ago will not be a distant vision but a reality.

Jin-eok Kim, Executive Director, External Policy Headquarters, Korea Financial Investment Association

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