Financial Supervisory Service: "Securities Firms Must Apply Reasonable Real Estate PF Fees"

2024 Financial Investment Sector Business Briefing Held
Industry Cooperation Requested for Smooth Real Estate Transition

Financial Supervisory Service, Yeouido, Seoul. Photo by Younghan Heo younghan@

The Financial Supervisory Service's financial investment division will focus on managing real estate risks this year. It urged the industry to strive to apply reasonable levels of project financing (PF) fees and interest rates that are not excessive to ensure an orderly soft landing of the real estate market.

On the morning of the 5th, Hwang Seon-oh, Deputy Governor of the Financial Supervisory Service, held the "2024 Financial Investment Sector Financial Supervision Briefing" at the FSS headquarters in Yeouido, Seoul, for executives and employees of financial investment companies. He stated, "Thorough risk management is necessary for the financial investment industry, which has a high investment ratio in risky assets such as real estate PF and overseas real estate."

Deputy Governor Hwang also emphasized that, as chronic sales practices and acts of pursuing private interests related to wrap accounts and trusts have been revealed in the financial investment industry, the industry itself should make self-purification efforts to restore trust. He warned against a 'performance-at-all-costs' mentality.

At the briefing, the FSS announced that its supervisory and inspection direction for the financial investment sector this year will involve meticulously managing the liquidity and soundness of each financial company to prevent real estate-related risks from spreading to the financial system.

It plans to reorganize the supervision and inspection system for growth industries such as token securities and generative artificial intelligence (AI) investments, and to improve the competitiveness of public funds by enhancing the autonomy of public fund management, among other institutional improvements.

Additionally, to prevent naked short selling, the short selling system will be reasonably improved, and supervisory measures for alternative trading systems (ATS) will be prepared. Entry and maintenance requirements for private fund managers will be reviewed, and improvement plans related to the fair value evaluation of assets included in alternative investment funds will also be developed.

Regarding inspections, integrated linked inspections of securities firms and asset management companies will be conducted to effectively detect complex cases. During inspections related to overseas real estate funds, securities firms and asset management companies will be linked for focused checks.

Conversely, the proportion of regular inspections will be reduced to concentrate manpower on major and urgent cases. Examples include comprehensive inspections of private fund managers and inspections of securities firms selling equity-linked securities (ELS).

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