South Korea targets market volatility and debt-fueled investing

South Korean financial authorities are preparing measures to address rising market volatility driven by debt-fueled investing, known as ‘bit-tu’. While investor deposits have decreased by approximately 9 trillion won recently, credit loan balances and unpaid brokerage funds have increased, with credit loans reaching 33 trillion won.

The Financial Supervisory Service (FSS) and the Financial Services Commission are discussing ways to mitigate risks, such as strengthening explanation duties for high-risk transactions, restricting margin trading for minors, and potentially lowering credit limits for securities firms. The FSS has also called on securities companies to enhance investor protection from the product planning stage to prevent improper sales practices and unauthorized credit inquiries.

In a separate regulatory move, authorities are planning the launch of a ‘Livelihood Financial Crime Special Judicial Police’ force by January next year. This unit is intended to provide rapid investigations into illegal private financing and debt collection crimes, allowing for immediate action upon receiving victim reports without the delays of traditional deliberation committees.