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| Financial Services Commission Chairman Choi jong-ku, left, speaks at a meeting with executives of brokerages at the Korea Financial Investment Association's headquarters in Seoul, Thursday. Yonhap |
By Park Hyong-ki
The country's financial regulator will allow freer customer and corporate data exchanges between business divisions within brokerages, as well as between securities companies and their asset management affiliates.
Also, it will revise relevant laws enabling them to work closely with fintech startups in stock trading and asset management.
Financial Services Commission (FSC) Chairman Choi Jong-ku said in a meeting with executives of brokerages in Seoul that these are part of efforts to boost the capital market and build a fintech ecosystem.
"I understand that the Financial Investment Services and Capital Markets Act does not reflect today's need for a change to boost innovation," Choi said Thursday.
He added the regulator will give them more freedom to exchange information, and collaborate with third-party fintech companies in processing customers' requests for stock trading and asset management.
This means the FSC will adopt a negative regulatory system, but deal sternly with companies that have been found to cross the line.
The exchange of data had been strictly forbidden as brokers, asset managers and corporate executives could misuse them for insider trading or stock price manipulation.
Under such circumstances, financial companies had been restricted from outsourcing part of their trading operations to and working with third-party firms.
That is why the regulator has kept the so-called "Chinese wall" between units.
"The renewed regulatory system will give them more freedom and responsibility, and our main task will be boosting post market management and consumer protection," Choi said.
This is in line with the government's efforts to divert investors and funds from the real estate market to the capital market so smaller innovative companies can get the money to finance their research and commercialization.
The regulator has indicated that it will let financial companies self-regulate, without constant FSC oversight.
But those caught abusing the system and affecting investors will face stronger penalties than under the previous positive system.
The latest move also follows the regulator easing rules classifying and governing private equity and hedge funds. It will no longer distinguish between the two and limit their roles in the capital market.
