"Sanctions Related to Overseas Stock Trading"...Financial Supervisory Service Issues Management Attention Notices to Toss, MERITZ and Mirae Asset Securities

[Financial News] The Financial Supervisory Service has issued management attention measures to securities firms in connection with overseas stock trading.
According to the Financial Supervisory Service's sanctions disclosure on the 11th, the regulator notified three securities firms—Toss Securities, MERITZ SECURITIES and Mirae Asset Securities—of management attention matters on the 9th. Specifically, the notices covered five matters for Toss Securities, four for MERITZ SECURITIES and two for Mirae Asset Securities. MERITZ SECURITIES also received three improvement measures.
All three securities firms were criticized over how they calculate foreign-currency deposit fee rates. The rate refers to the fee paid to customers for the securities firm's custody and management of their foreign-currency deposits, such as U.S. dollars.
Toss Securities was found to have set the fee rate at a low level without reasonable justification. MERITZ SECURITIES and Mirae Asset Securities, meanwhile, were criticized for including costs unrelated to deposits when calculating the rate.
The Financial Supervisory Service also identified shortcomings in Toss Securities' and Mirae Asset Securities' systems for selecting and managing local brokers for overseas stocks. Toss Securities was ordered to establish systematic records management for its evaluation criteria and evaluation records. Mirae Asset Securities was instructed to mitigate the concentration of most orders being allocated to its U.S. local entity.
Marketing related to overseas stocks was another area requiring attention. Toss Securities was criticized because its "Stock Gathering" service charges no purchase commission but does charge selling and foreign-exchange fees, while the app describes it as offering "commission-free" trading.
The Financial Supervisory Service noted that MERITZ SECURITIES conducts monitoring and imposes foreign-exchange restrictions to block abnormal transactions aimed solely at foreign-exchange gains rather than investment purposes while running an event offering free currency-exchange fees. However, it warned that the firm may fail to block abnormal transactions in a timely manner amid recent changes in the operating environment.
The Financial Supervisory Service also cited Toss Securities for setting and operating key performance indicators with investor protection in mind, as well as strengthening procedures to confirm investors' intentions regarding the exercise of voting rights for overseas stocks.
For MERITZ SECURITIES, the regulator cited the establishment and operation of key performance indicators that take investor protection into account and the creation of a process to monitor excessive trading in overseas stock accounts. It also communicated improvement measures covering business-process improvements to prepare for computer system incidents, stronger in-house risk management and risk disclosures for overseas derivatives, and improvements to negotiated-fee standards.

[email protected] Lim Sang-hyuk Reporter