FSS Chief Lee Chan-jin Vows Stronger Warnings on Forced Liquidations and Other Investment Risks

Lee Chan-jin, Governor of the Financial Supervisory Service, ordered a significant strengthening of investor risk warnings, including those related to forced liquidation of margin trades, 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. Noting that financial market uncertainty is likely to persist, he strongly urged the securities industry to ensure there are no lapses in risk management and investor protection.
The Financial Supervisory Service (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, who is on a business trip to attend the Group of Governors and Heads of Supervision (GHOS) meeting of the Basel Committee on Banking Supervision (BCBS), convened the meeting at 2 a.m. local time to discuss measures to stabilize financial markets amid the Middle East tensions.
At the meeting, Lee said, "All departments must recognize the gravity of the situation and mount an all-out response centered on the in-house Middle East Emergency Response Task Force to safeguard financial market stability and maintain the soundness of financial institutions."
The FSS plans to focus its efforts in particular on minimizing losses for retail investors that may arise from sharp swings in the stock market. Securities firms will be instructed to step up investor risk disclosures so that margin investors are not exposed to excessive risks such as forced liquidation, and the FSS will thoroughly review related risk management systems. It will also monitor, in real time, retail investors’ positions in leveraged Exchange-Traded Funds (ETF) and provide guidance to help prevent large-scale losses. Crackdowns on illegal activities that disrupt market order will proceed in parallel. Lee stressed that any violations would be met with strict action.
The FSS is closely examining how changes in oil prices and exchange rates are affecting different domestic industries and corporate financing 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