Lee Bok-hyun "Securities Firms Should Fulfill Their Original Role... Must Move Away from Short-Term Profit Focus"

Meeting with CEOs of 24 Major Securities Firms

On the 5th, Lee Bok-hyun, Governor of the Financial Supervisory Service, stated at a meeting with securities firms held at the Korea Financial Investment Association in Yeouido, Seoul, that "securities firms must be more dedicated to their fundamental role of driving innovative growth through the supply of venture capital."

Lee Bok-hyun, Governor of the Financial Supervisory Service, speaking at a meeting with securities firms held on the 5th at the Korea Financial Investment Association in Yeouido, Seoul. Photo by Yoo Hyun-seok

Governor Lee made these remarks during his opening speech at the meeting held in the main conference room of the Korea Financial Investment Association, attended by Seo Yoo-seok, Chairman of the Korea Financial Investment Association, and CEOs of 24 securities firms (10 comprehensive securities firms, 11 small and medium-sized firms, and 3 foreign firms) along with related organizations.

He evaluated that the securities industry has supported corporate growth and industrial development, and recently has grown significantly in scale through the introduction of the comprehensive securities firm system and strengthening of investment banking (IB) capabilities. He also explained that the industry’s crisis response capabilities were demonstrated by quickly overcoming concerns about real estate project financing (PF) defaults in 2022.

He emphasized that for the sustainable growth of the securities industry, firms must be more devoted to their fundamental role of driving innovative growth through the supply of venture capital. Governor Lee said, "If the banking industry is a 'solid dam' that provides water stably, the securities industry must become the 'rapids of innovation' that create new waterways," adding, "We must break away from short-term profit-oriented management practices and actively implement sustainable investment strategies such as discovering new industrial sectors, expanding investment methods, and constructing long-term investment portfolios."

He also stressed that domestic securities firms are at a disadvantage compared to global IBs in terms of capital size and profitability, so they must fundamentally strengthen their competitiveness through 'digital transformation and technological innovation.' He explained, "We need to expand investments in new technologies such as artificial intelligence (AI), big data, and blockchain, and advance digital financial infrastructure," adding, "By strengthening high value-added IB capabilities and exploring new business models, we must secure differentiated competitiveness."

Alongside this, he emphasized the necessity of 'enhancing investor trust' through robust internal controls. He said, "Failures in internal control are not just issues for individual financial companies but lead to the collapse of trust in financial markets, and financial markets that lose trust cannot grow," pointing out, "It is necessary to reflect on the recent expansion of investors’ direct overseas investments and the stagnation in asset management growth within the securities industry."

He added, "As a responsibility structure is introduced to the securities industry, it is essential to clearly define responsibilities and roles reflecting the 'unique business characteristics' of the securities industry, strengthen investor protection, and establish a sophisticated internal control system including a continuous monitoring framework."

At the meeting, securities firm CEOs agreed to work together to strengthen industry competitiveness and reinforce risk management and internal controls to support this.

However, they proposed that to expand the supply of venture capital, the role of mega IBs should be strengthened and the activation of issuance of commercial papers should be promoted. They also emphasized the need to expand the scope of securities firms’ business, including allowing corporate payment settlements. Regarding the resumption of short selling, they agreed on the necessity to enhance predictability for investors through the operation of management and supervision systems.

Additionally, they reached consensus on the importance of enhancing corporate value and strengthening investor communication to increase the value of the Korean stock market, requesting tax support for expanding participation in corporate value-up programs and the prompt implementation of corporate governance reforms.

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