South Korea market watchdog wary of FX risks for retail investors
Currency dealers work as an electronic board shows the Korean Composite Stock Price Index (KOSPI) and the exchange rate between the U.S. dollar and South Korean won at a dealing room of a bank, in Seoul, South Korea, December 9, 2024. REUTERS/Kim Kyung-Hoon
SEOUL, Dec 1 : The chief of South Korea's financial market watchdog said on Monday authorities would review protection measures for retail investors regarding foreign exchange risks amid persistent weakness in the won currency.
"From the perspective of consumer protection, we will review whether the matters related to hedging foreign exchange risks for overseas investments are being fully explained by financial firms," Lee Chan-jin, the governor of the Financial Supervisory Service, told a press conference.
Lee was speaking on an earlier government announcement that authorities would conduct inspections on protection measures for retail investors, adding that they do not plan to regulate overseas stock investments.
The won has weakened more than 4 per cent against the dollar so far this quarter, which the country's central bank last week attributed to increasing overseas investments by residents and sales of domestic stocks by foreigners.
There is no sign of risks for financial firms in terms of foreign exchange exposure, Lee said. "On the contrary, some insurance firms are making profit," he said.
Regarding ongoing investigations into private equity firm MBK Partners over its sale of troubled supermarket chain Homeplus and media reports of potential heavy sanctions, Lee said a decision would be made this month.
MBK, in response to a request for comment, said: "MBK Partners has been doing its best to protect investor interests, according to relevant laws and articles of association."
It said it would give a full explanation in any future proceedings with the regulator.
Lee also said authorities, who are also investigating local banks over their sales of equity-linked derivatives, would take into account their efforts to compensate investor losses.
Recent data leaks at financial firms and other South Korean companies, including cryptocurrency exchange Upbit, Lotte Card and e-commerce retailer Coupang, raise the need for stronger regulations, Lee said, criticising companies for being negligent in their data security.
