Financial Supervisory Service Calls for Enhanced Internal Controls Amid Growing ETF Market
The Financial Supervisory Service (FSS) and Korea Financial Investment Association recently held a joint workshop focused on strengthening internal controls within the asset management industry. The event addressed the rapid expansion and intensifying competition in the Exchange-Traded Fund (ETF) sector, emphasizing repeated regulatory violations and the critical importance of risk management. Heated issues included excessive ETF advertising, deficiencies in internal control systems, and the need for firms to establish mechanisms to prevent improper securities lending and wash trading, all aimed at bolstering investor protection and compliance.
The utilization of artificial intelligence (AI) in compliance monitoring and process efficiency was also discussed as a significant agenda item. Both large and smaller asset managers face new responsibilities, such as the planned introduction of a responsibility structure chart, scheduled to be implemented from July. This initiative reflects the ongoing efforts required to enhance trust in the asset management industry and ensure greater transparency in capital markets. Overall, the workshop highlighted the pressing need for robust internal control frameworks to support investor protection and reinforce market confidence.
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