Ikbokhyun with One Year Left in Term: "Focusing on PF Restructuring and Value-Up... Tax Issues like Financial Investment Tax in Second Half Are Important"

"Second Half Tax Policy Hearing to Open"
Intent to Express Opinions on Financial Investment Tax, Inheritance Tax, Dividend Tax
Repeated Emphasis on Establishing Order in Capital Markets
Strict Response to Unfair Trading

Lee Bok-hyun, Governor of the Financial Supervisory Service. Photo by Kang Jin-hyung aymsdream@

Lee Bok-hyun, Governor of the Financial Supervisory Service (FSS), emphasized on the 4th that during the remaining term of his office, he will focus on correcting market order issues such as restructuring real estate project financing (PF), internal controls, and unfair trading. Along with this, he stated that in the second half of the year, he will express opinions on tax issues such as financial investment income tax (FITS), inheritance tax, and dividend tax as part of advancing the capital market.

On the same day, Governor Lee held a luncheon meeting with the press corps in Yeouido, Seoul, marking his 2nd anniversary in office, and said, "We will steadily proceed with PF restructuring and capital market value-up to enhance the capabilities of finance."

Governor Lee took office as the head of the FSS on June 7, 2022. He attracted market attention from the beginning as the youngest FSS governor with a background in prosecution. At the start of his term, he clearly stated the supervisory direction by saying, "Eradicating unfair trading acts will enhance participants' trust in market order and ultimately serve as the foundation for revitalizing the financial market."

Reiterates Establishing Market Order with Strict Punishment for Unfair Trading

At the 2nd anniversary meeting, Governor Lee emphasized again, "Since the FSS is responsible for investigations and inspections, there is no one else who can do this if we do not," and added, "We will strongly and affectionately strive to hold those who violate regulations accountable as the final defender."

He also said at the meeting, "We will enhance investor trust through the computerization and institutional improvement of short selling, and at the same time, respond more strictly to financial fraud and unfair trading." Shortly after taking office in June 2022, Governor Lee launched a dedicated short selling investigation task force and a short selling investigation team in August. The department was later expanded to the 'Special Short Selling Investigation Unit,' and he has been directly overseeing related issues.

After illegal short selling was detected, the Financial Services Commission temporarily banned short selling entirely in November last year. The ban was planned to last until this month, but the Presidential Office announced that short selling will not resume until a computerized system to block illegal short selling is established.

In particular, he hinted that in the second half of the year, he will express opinions on tax-related issues such as FITS, inheritance tax, and dividend tax. Governor Lee said, "We need to consider the changed circumstances such as COVID-19, rising base interest rates, bond investment activation, and virtual asset issues," adding, "This has opened a discussion on rationalizing the entire system."

He continued, "This year, discussions on FITS, corporate tax, and dividend tax are expected, and in the case of inheritance tax, we inevitably have to look at its impact on capital markets such as business succession," emphasizing, "The tax-related arena has opened in the second half of the year." Therefore, although the FSS is not responsible for tax matters, he explained that it cannot help but express opinions related to FITS.

Shows Interest in Virtual Asset and Accounting Issues

Governor Lee also mentioned virtual asset issues. Regarding the approval of Bitcoin and Ethereum exchange-traded funds (ETFs) by overseas financial authorities such as the United States, he said, "Our authorities have doubts about whether consumer protection is adequately ensured," and added, "I felt that overseas authorities do not have very different views on this."

However, he expressed a personal opinion that the virtual asset futures market could help mitigate price volatility in the spot market. Governor Lee said, "There is a mechanism where futures markets offset spot market volatility for general commodities like wheat and copper," and added, "Although there are consumer protection issues related to virtual assets, I thought the mechanism where price adjustments in the futures market alleviate the spot market could work better than expected."

Regarding the Securities and Futures Commission meeting scheduled tomorrow on accounting fraud related to Kakao Mobility, he said, "If procedural improvements are needed from the authorities' perspective, we can express opinions, but the conclusion of individual cases must be respected." He explained that it is not appropriate to attack the Securities and Futures Commission's procedures or system just because their conclusion differs from the FSS's opinion.

Governor Lee reiterated, "I emotionally dislike 'rule breaking' such as accounting fraud or consumer-related issues," but added, "If the Securities and Futures Commission, based on evidence and procedures, issues an opinion that it does not consider the accounting fraud intentional, it is right to respect that."

Expresses Willingness for PF Restructuring... Emphasizes Reflecting the Scale of Insolvency in Numbers

Lee Bok-hyun, Governor of the Financial Supervisory Service (right), and Jung Wan-kyu, Chairman of the Korea Federation of Credit Finance, are attending and exchanging opinions at the "Construction Industry Meeting for the Soft Landing of Real Estate PF" held on the 29th at the Construction Hall in Gangnam-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

He also spoke out in response to criticism regarding the authorities' direction to induce early or forced sales in PF project restructuring. Governor Lee explained, "If the assets held by financial companies cannot be transferred to normalized projects for a long time or if rising costs make it difficult to achieve business plans, we recommended building sufficient provisions or recovering funds even at low prices," adding, "We did not necessarily emphasize early or forced sales."

He pointed out, "It is fine if it can be maintained as non-performing loans (NPLs), but the meaning is to reflect accurate numbers." Governor Lee sharply criticized, "The industry argued that three years would be good, but at this point, no one thinks that real estate prices will surge to generate profits."

Additionally, Governor Lee stated that he will lay the foundation to respond to unavoidable changes such as digital transformation and demographic shifts. He explained, "While supporting the successful establishment of the Virtual Asset Act, which will be enforced next month, we will also thoroughly prepare so that AI technology and network separation can become new driving forces in our financial market."

Furthermore, he promised to transform the FSS into a healthy and flexible organization. He emphasized that for the financial market to move in the right direction, the FSS must be healthy and flexible above all.

Governor Lee said, "We will finalize the organizational culture consulting underway this year to firmly establish the FSS's organizational culture and accelerate digital transformation to build an efficient and flexible supervision and inspection system."

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