South Korea’s Financial Services Commission published a preliminary notice of amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act and related rules to strengthen early detection of unfair trading and tighten sanctions. The package would enable the Korea Exchange (KRX) to move from account-based to individual-centred market surveillance, and would raise penalty surcharge standards for unfair trading and disclosure violations while adding new aggravated sanctions criteria for certain misconduct. To support the surveillance upgrade, the KRX market surveillance committee would be permitted to process investors’ resident registration numbers in pseudonymized form, which is expected to reduce surveillance targets by about 39 percent and improve the ability to link activity across accounts to the same entity, assess participation in manipulation and identify cross-trading. On sanctions, the minimum penalty surcharge for insider trading, price manipulation and other unfair transactions would rise to 100 percent of illicit profits from 50 percent, with the maximum remaining 200 percent, while market-disrupting activities would move to 100 percent to 150 percent from 50 percent to 150 percent. For disclosure violations, the surcharge range would increase to 40 percent to 100 percent of the maximum penalty under the Act, and the same rates would apply to executives such as largest shareholders where they can be sanctioned in connection with securities registration statements or public tender statements. Unfair trading by financial company employees in the course of duty and false disclosure of material information by listed companies would be added to aggravated sanctions criteria, allowing penalty surcharges at an aggravated level of up to 30 percent and extending trading bans and restrictions on serving as a listed-company executive by up to 66 percent. The comment period runs from 24 July to 2 September 2025, with the amendments then set to proceed through legislative review and approval ahead of entry into force targeted for October 2025.
South Korea Financial Services Commission 2025-07-23
South Korea Financial Services Commission proposes individual-based Korea Exchange surveillance and tougher surcharges for unfair trading and disclosure breaches
South Korea’s Financial Services Commission proposes amending the Enforcement Decree of the Financial Investment Services and Capital Markets Act to enhance market surveillance and tighten sanctions on unfair trading. The Korea Exchange would adopt individual-centred surveillance, significantly increase penalty surcharges for insider trading and disclosure violations, and introduce new aggravated sanctions criteria for misconduct, including unfair trading by financial company employees and false disclosures by listed companies.