Korea Exchange - Protecting and educating investors

Published by: The WFE Focus Team Sep 2020

The Korea Exchange (KRX) will participate in the fourth World Investor Week (WIW). With the opening bell event on October 12, the KRX joins the event for the second consecutive year. This time, KRX will begin its week-long campaign with its event partner, Korea’s Financial Supervisory Service (FSS).

KRX is seeking to:

  • raise investor awareness about financial literacy; and
  • emphasise the importance of investor education and protection to financial institutions and regulators.

KRX’s WIW 2020 programme comprises five main events which last from 12–16  October, with some continuing through the fourth quarter of this year. The event details are as below.

WIW 2020 programme 

Title

Period

WIW Opening bell event

Oct 12

Reporting period for unfair trading

Oct 12 – TBD

Financial dispute prevention education for investors & members

Oct 12 – Dec 31

Unfair trading prevention education for listed companies

Oct 12 – Dec 31

Providing online publications on KRX investor protection services

Fourth 2020


WIW Opening bell event

On October 12, with the opening of the stock market, the opening bell event takes place at the first floor lobby of the KRX Seoul office annex building. During the event, staff from the KRX Market Oversight Committee declare the start of “World Investor Week 2020 in Korea”, and the statement “Ring the Bell for Financial Literacy” will be displayed on an electronic display. Details of WIW initiative and related KRX programmes are available on the KRX website (www.krx.co.kr) with a pop-up banner during the period.

Reporting period for unfair trading

With WIW opening bell event, the unfair trading reporting campaign begins. KRX Market Oversight Committee has operated an Unfair Trading Reporting Centre to protect investors from unfair trading such as stock price manipulation and use of non-public information. Investors who are suspicious of trading behaviour can report it to the KRX after which and KRX investigates for any violation of regulations. Depending on the severity of the case, KRX may issue a fine of reward up to 2 billion Korean Republic Won (or about US$ 1.7 million). Detailed information will be posted on the KRX and KRX member firms’ websites during the event.

Financial dispute prevention education for investors & members

The KRX provides education programmes for retail investors to prevent financial disputes between them and KRX member firms (financial institutions). The KRX finds that most financial disputes emerge from five major issues:

  • system failure;
  • order execution procedure;
  •  inappropriate recommendation;
  •  arbitrary purchase and sale; and
  •  discretionary transactions.

The education programme starting October 12 describes the disputes mentioned above and precautions to avoid them. All training programmes are provided from KRX member firms’ own video streaming platform, and are done by either real-time video training or video streaming format.

Unfair trading prevention education for listed companies

Apart from a retail investor education, KRX operates an education programme for listed-company staff to prevent unfair trade practices from their side. With an hour-long real-time video training programme, participants learn about cases and examples of unfair practices which can arise from their trade. Newly listed companies unfamiliar with these concepts are KRX’s main target for this programme. After the period, the KRX will expand its service to companies already listed and extend the programme till the end of the year.

Providing online publications on KRX investor protection services

KRX Market Oversight Committee is to distribute online flyers to help investors and the employees of KRX member firms to better understand services offered by the KRX to protect financial market participants.

The flyer includes:

  • a role of KRX dispute mediation centre, its working range and how to use it;
  • information about the KRX unfair trade practices reporting centre;
  • online investor education programme guidelines and so on.

KRX will distribute materials via KRX and KRX member firms’ websites and other social media during the fourth quarter of 2020.

By operating WIW this year as a member of World Federation of Exchanges (WFE), the KRX expects to expand financial knowledge of market participants, especially retail investors to protect them from financial conflict or unprecedented loss. Also, KRX works with KRX member firms by working with them to offer education programmes and carry out campaigns with the same initiative, which emphasises the importance of investor protection and education.