South Korea’s Financial Services Commission (FSC), together with the Financial Supervisory Service (FSS) and the Korea Exchange (KRX), published a joint package to strengthen detection, investigation and punishment of unfair trading in stock markets, including stock price manipulation. The measures combine a new joint investigative set-up, upgrades to market surveillance, expanded use of administrative sanctions and changes to delisting rules aimed at removing underperforming listed companies more quickly. A joint response team will be established at the KRX to bring KRX examination and FSC and FSS investigation capabilities into the same workspace and enable earlier, coordinated action on urgent cases, including those involving frequent rule-breakers, major shareholders or executives, and false information on social media. Market surveillance will shift from an account-based approach to an individual-centered approach by revising the Enforcement Decree of the Financial Investment Services and Capital Markets Act to allow use of investors’ personal data in pseudonymized form linked to accounts, which the authorities estimate will narrow surveillance and examination targets by about 39 percent; KRX surveillance is also expected to incorporate artificial intelligence to refine how potential cases are assessed and charged. Administrative tools will be used more actively, including rapid account freezes where illicit gains are strongly suspected, penalty surcharges of up to 200 percent of unfairly gained profits, and short sale-related penalty surcharges of up to 100 percent of the short sale order amount, alongside institutional sanctions such as business suspension and restrictions on trading financial investment products. On listings, the authorities plan staged increases to market capitalization and sales or profitability thresholds, tighter remediation timelines for inadequate audit reports, immediate delisting for companies with inadequate audit reports twice consecutively, and a shortened KOSDAQ delisting review process to two stages from three. These delisting-related changes are set to take effect from July 10 once the FSC approves revisions to the KRX listing rules.
South Korea Financial Services Commission 2025-07-09
South Korea Financial Services Commission, Financial Supervisory Service and Korea Exchange set out one strike out measures against unfair stock market trading
South Korea's Financial Services Commission, with the Financial Supervisory Service and the Korea Exchange, announced measures to combat unfair stock trading, including price manipulation. Initiatives include a joint investigative team, enhanced market surveillance using pseudonymized data, and increased sanctions. Delisting rules will tighten, with higher thresholds and expedited processes for underperforming companies.