Regret over 1.6 trillion won in fines, referral of 7 firms for prosecution

Association to support industry's legal challenges, including administrative lawsuits

Concerns raised over impact on government bond issuance

Global credibility of Korea's bond market seen at risk

The Korea Financial Investment Association building in Yeouido, Seoul [Korea Financial Investment Association]
The Korea Financial Investment Association building in Yeouido, Seoul [Korea Financial Investment Association]

The Korea Financial Investment Association expressed regret Wednesday over the Korea Fair Trade Commission's decision to sanction 15 primary dealers in the government bond market for collusion, saying it would support the industry's legal challenges, including administrative lawsuits. The association cited concerns that fines totaling more than 1.6 trillion won ($1.19 billion) and the referral of seven firms for criminal prosecution could burden government bond issuance and securities firms' operations.

"We believe the level of sanctions and the fines have been calculated excessively," the association said. "We plan to actively support the industry in demonstrating the problems with these sanctions and the unreasonableness of the fine calculations through lawful procedures such as administrative lawsuits."

Earlier, the Fair Trade Commission issued corrective orders and imposed a combined 1.63 trillion won in fines on 15 primary dealers found to have agreed in advance on bidding rates and volumes, or exchanged bidding rate information, during government bond auctions. It also referred seven of the firms to the Serious Crimes Investigation Agency for prosecution. The fines are the largest ever levied by the commission.

The association warned of broader repercussions for the government bond market and the financial investment industry. Primary dealers play a key role in supporting the government's fundraising in the issuance and distribution markets for government bonds. The association argued that if the sanctions curtail the dealers' role and functions — or lead to license suspensions or cancellations — government bond issuance could be disrupted.

The association also said the massive fines could constrain securities firms' liquidity and dampen their core business activities. It added that delays in new licensing approvals could weaken the global competitiveness of Korea's capital markets.

The association said the sanctions could also hurt Korea's international credibility at a time when foreign capital is flowing in following the inclusion of Korean government bonds in the World Government Bond Index. Korea's government bonds began joining the WGBI in April 2026.

Korea Financial Investment Association Chairman Hwang Seong-yeop said the association shares the need to establish a fair market order, but expressed deep concern that the sanctions could shrink the role of primary dealers and ultimately burden the government's fiscal financing and financial market stability.

"We will make greater efforts to establish a fair market order and strengthen internal controls in light of this case," Hwang added. "Going forward, we will communicate closely with the government and relevant authorities and do our utmost to ensure the stable development of the government bond market and restore trust in the financial investment industry."


kacew@heraldcorp.com