FSS Governor Lee Chan-jin Vows Stronger Warnings on Investment Risks Such as Forced Liquidation

[Financial News] Lee Chan-jin, Governor of the Financial Supervisory Service (FSS),picturedhas ordered a major strengthening of investor risk notifications, including the possibility of forced liquidation in margin trading, in response to rising volatility in domestic and global financial markets caused by the Middle East crisis. He also instructed the launch of a 24-hour emergency response system and strongly urged the securities industry to ensure there are no gaps in risk management and investor protection, given the high likelihood that financial market uncertainty will persist.
The FSS said on the 10th that Lee chaired an executive meeting on the Middle East situation via video link between Basel, Switzerland, and the FSS headquarters in Seoul. Lee is in Basel to attend the Group of Governors and Heads of Supervision (GHOS), the top-level meeting of the Basel Committee on Banking Supervision (BCBS). He convened the meeting at 2 a.m. local time to discuss measures to stabilize financial markets amid the Middle East crisis.
At the meeting, Lee said, "All departments must recognize the gravity of the situation and respond with full force, centering on the in-house Middle East Emergency Response Task Force, to stabilize financial markets and safeguard the soundness of financial institutions."
The FSS plans to focus its efforts on minimizing potential losses for retail investors during sharp swings in the stock market. Securities firms will be required to significantly strengthen risk disclosures so that margin traders are not exposed to excessive risks such as forced liquidation, and the FSS will thoroughly review their related risk management systems.
In addition, the FSS will monitor in real time the investment status of retail investors in leveraged exchange-traded funds (ETFs) and provide guidance on key precautions to help prevent large-scale losses.
Crackdowns on illegal activities that disrupt market order will proceed in parallel. If stock influencers use YouTube or social media (SNS) to spread false information, or if unfair trading such as front-running through paid stock-tipping chat rooms is detected, the FSS plans to launch immediate investigations. Lee stressed that any violations will be met with strict enforcement.
The FSS is closely examining how fluctuations in oil prices and exchange rates are affecting different domestic industries and corporate funding conditions. Lee stated, "Until the situation in the Middle East stabilizes, we will maintain a 24-hour emergency response system and, when necessary, work with relevant authorities to implement market stabilization measures in a timely manner."

elikim@fnnews.com Reporter Kim Mi-hee Reporter