Korea Financial Investment Association: "Government Bond Collusion Fines Excessive... Will Support Administrative Lawsuits"

FTC Fines 15 Primary Dealers 1.6 Trillion Won
"Concerns Over Disruptions to Government Bond Issuance and Damage to the Country's Reputation Abroad"

The Korea Financial Investment Association expressed regret on the 11th, saying the Fair Trade Commission’s sanctions over collusion in government bond bidding were excessive. The association said it would actively support industry players responding through lawful procedures, including administrative lawsuits.

Kim Geunseong, a standing commissioner of the Fair Trade Commission, briefs reporters on the sanctions imposed on 15 companies for unfair concerted conduct related to Treasury bond bidding at the Government Complex Sejong in Sejong on the 11th. Yonhap News.

The Fair Trade Commission said that 10 securities firms and five banks serving as primary dealers (PDs) for government bonds had restricted competition by agreeing in advance on bid rates and volumes or exchanging interest-rate information in government bond auctions held by the Ministry of Economy and Finance. It imposed fines totaling more than 1.6 trillion won, the largest amount ever imposed on the financial investment industry. It also decided to file complaints against seven companies: Mirae Asset Securities, NH Investment & Securities, Industrial Bank of Korea, KB Securities, Kiwoom Securities, Korea Development Bank, and Korea Investment & Securities.

The association expressed concern that excessive sanctions could undermine the role of PDs. It said government bond issuance could face serious disruption if PD qualifications were suspended or their designations revoked. It also said that mass sanctions could severely damage the country's reputation abroad, at a time when foreign capital is flowing in following the inclusion of Korean government bonds in the World Government Bond Index (WGBI) in April.

The association also addressed the potential impact on securities firms' business. It said fines of hundreds of billions to trillions of won per company, along with complaints filed with the Serious Crimes Investigation Agency, could constrain liquidity and hamper business operations. It added that concerns included a possible decline in the capital market's global competitiveness due to disruptions to new licenses and other issues.

Hwang Seongyeop, chairman of the Korea Financial Investment Association, said, "We agree on the need to establish a fair market order, but are deeply concerned that these sanctions could undermine the role of primary dealers in government bonds and place a burden on national fiscal financing and financial market stability. We will work harder to establish a fair market order and strengthen internal controls."

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