ETF Favoritism Controversy Emerges as Key Issue in National Audit
The practice of favoritism within financial groups using Exchange Traded Funds (ETFs) has become a significant point of contention during the national audit. Kang Hoon-sik, a member of the Democratic Party, has accused large financial affiliates like Samsung and KB Financial of disturbing the ETF market through internal transactions with asset management firms. Calls for regulatory measures and policy remedies from financial authorities have emerged, with Financial Services Commission Chairman Kim Byung-hwan promising to take institutional actions based on the results of investigations by the Financial Supervisory Service.
There is a particular focus on allegations that major financial affiliates have inflated ETF net assets through internal dealings with asset management branches, thereby disturbing market equilibrium. These concerns were a central topic in the discussions at the National Assembly's Political Affairs Committee audit, where calls for amendments to the Financial Investment Services and Capital Markets Act were floated. Notably, the absence of regulations covering ETFs is feared to be disrupting market order.
Additionally, major asset management firms like Samsung Asset Management, Mirae Asset, KB Asset Management, and Korea Investment & Securities have been spotlighted as central players in this controversy. The Financial Supervisory Service is currently conducting on-site inspections of these firms, and the results are expected to significantly influence the financial authorities' policy decisions, particularly concerning potential ETF regulation enhancement.
Furthermore, issues relating to the swift resolution of uncertainties tied to the financial investment income tax, as well as shareholder protection amid demergers and mergers, were also brought to attention. These actions are expected to potentially lead to restored trust in the ETF market and regulatory tightening in the foreseeable future.
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