The Financial Services Commission (FSC)
SEOUL, Oct. 23 (Korea Bizwire) — South Korea will overhaul its market surveillance framework this month, moving from an “account-based” to an “individual-based” monitoring system in an effort to better detect unfair trading and improve enforcement efficiency, financial regulators announced Wednesday.
The Financial Services Commission (FSC) said that amendments to the Enforcement Decree of the Capital Markets Act and the Market Surveillance Regulations were approved at the Cabinet meeting earlier in the day, clearing the way for the new system to take effect on October 28.
Under the revision, the Korea Exchange (KRX) will be legally authorized to use pseudonymized personal data, including resident registration numbers, when conducting market surveillance.
The change is intended to allow regulators to identify and track individuals behind multiple accounts, addressing a long-standing blind spot in the previous system that relied solely on account information.
By shifting to a personal identification framework, the number of entities subject to surveillance and analysis is expected to fall by nearly 40 percent, significantly improving monitoring accuracy and efficiency. As of last year, there were about 23.2 million securities accounts in South Korea, compared with 14.2 million individual shareholders.
The amended rules also strengthen penalties for unfair trading and disclosure violations. The minimum administrative fine for major market abuses — insider trading, price manipulation, and fraudulent transactions — will double from 50 percent to 100 percent of illicit gains, while the upper limit remains 200 percent.
For market-disturbing activities, the fine will rise from 50–150 percent to 100–150 percent of the profit obtained. In cases of illegal short selling, the total order amount will now be used as the base for calculating fines.
Disclosure violations will face a higher minimum penalty, increasing from 20 percent to 40 percent of the statutory maximum fine under the Capital Markets Act.
The FSC also introduced stiffer sanctions for financial firm employees who misuse confidential information acquired on the job. Such individuals could now face both monetary penalties and up to five years of restrictions on securities trading or executive appointments.
Regulators said the changes aim to modernize oversight in line with data privacy laws while delivering a more targeted and credible response to unfair trading practices in South Korea’s capital markets.
M. H. Lee (mhlee@koreabizwire.com)
