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Photo courtesy of Yonhap News |
[Alpha Biz= Paul Lee] SEOUL, August 25, 2025 — The Financial Supervisory Service (FSS) has issued a stern warning to securities firms, stating that repeated or serious IT system failures could result in the revocation of business licenses under the Capital Markets Act.
The warning was delivered at the Workshop on Enhancing the Safety of Capital Market Transactions, held on August 25 at the FSS headquarters in Seoul, with about 150 participants from securities firms and related institutions.
During the session, Lee Jung-woon, Team Leader of the FSS IT Examination Bureau, explained, “While IT failures are generally reviewed under the Electronic Financial Transactions Act, services not covered by that law fall under the Capital Markets Act. If serious internal system deficiencies are discovered, licenses may be revoked under the law.”
Article 373-2 (2) of the Capital Markets Act stipulates that entities seeking to establish or operate an investment product market must be equipped with adequate personnel, IT systems, and infrastructure to ensure investor protection.
Lee pointed out that several online-based securities firms, particularly newer entrants aggressively expanding market share through promotions, have experienced frequent IT accidents. “The number of incidents at some firms has been disproportionately high compared to peers. With the growth of electronic trading and intensifying retail competition, risks have increased significantly for online and retail-focused securities firms,” he said.
He further criticized inadequate preparedness, noting cases where firms failed to detect incidents in time or lacked proper response protocols. “Some firms were unable to respond effectively after accidents, missing opportunities to mitigate losses and protect their reputations,” he added.
The FSS announced it will classify firms with high incident frequency as “high-risk” and assign dedicated examiners for close monitoring. Depending on the severity, the regulator may conduct executive-level interviews, on-site inspections, and impose strict sanctions.
At the workshop, KB Securities and Meritz Securities shared measures to strengthen system stability, including organizational expansion and improved program testing. Meritz Securities, which suffered three IT failures in overseas stock trading last December, formed a CEO-led task force, doubled its IT workforce from 60 to 120, and more than tripled its annual IT budget from KRW 13 billion to KRW 40 billion.
The company’s CIO emphasized, “Under the strong leadership of our CEO, we are addressing the root causes of the issues. System stability will remain our top priority.”
According to the FSS, securities firms reported 58 IT failures in the first half of 2025 alone. These included a seven-minute halt in KRX trading in March due to a system error, transaction delays at Kiwoom Securities for two consecutive days, multiple system outages at Toss Securities, and additional incidents at Mirae Asset Securities and Meritz Securities.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
