KOREAN REPUBLIC: FSC Proposes Changes to Capital Market Rule

Wednesday July 23 2025

On 23^rd July 2025, the Financial Services Commission (FSC) issued a preliminary notice of regulatory changes regarding the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and subordinate rules to strengthen early response and bring more stern measures against unfair trading activities.

Key Revision Details

Establish a regulatory ground to upgrade KRX’s surveillance system to make it more individually focused (from account-based system currently)

The revision proposal authorizes the KRX’s market surveillance committee—in its surveillance capacity—to process investors’ personal data (resident registration number in pseudonymized form). Based on this, the KRX will be able to perform more individually focused market surveillance.

Strengthen the criteria for imposing penalty surcharges and introduce aggravated sanctions criteria

Penalty surcharge for unfair trading activities

To more strictly deal with unfair trading activities and more effectively collect unfairly gained profits, these penalty surcharge standards will be raised to either 100 percent to 200 percent of the amount of unfairly gained profits (for use of undisclosed material information, price manipulation, or unfair transaction) or 100 percent to 150 percent of the amount of unfairly gained profits (for market disrupting activities).

Penalty surcharge for disclosure violations

These penalty surcharge standards will be raised to 40 percent to 100 percent of the maximum penalty imposable under the FSCMA. The same penalty surcharge rates (40 percent to 100 percent of the maximum penalty imposable under the FSCMA) will apply to company executives such as largest shareholders.

Aggravated sanctions for employees of financial companies

The revision proposal newly adds the use of undisclosed material information and unfair trading activities by employees of financial companies in their line of duty to the aggravated sanctions criteria. Under this system, rule-breakers can be subject to penalty surcharges at an aggravated level of maximum 30 percent. They may also be prohibited from engaging in transactions of financial investment products and/or from serving as an executive at a listed company for up to 66 percent longer period. False disclosures of material information by listed companies will also become newly subject to penalty surcharges at an aggravated level of maximum 30 percent.

With the revised rules in place, authorities are expected to more quickly identify and detect unfair trading activities and take more stern measures against unfair trading activities and unfaithful disclosures, thereby promoting fairness and strengthening investor protection in the market.

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