Ahead of the Chuseok holiday, securities firms are showing caution in marketing overseas stocks. They say it is still difficult to roll out aggressive holiday events as they remain mindful of financial authorities' request late last year to restrain marketing.

As of Sept. 22, the financial investment industry says overseas stock units at domestic brokerages say regulators' past request for restraint continues to influence marketing decisions. The mood differs from previous years, when firms sought to attract customers with overseas stock events ahead of major holidays.

Financial authorities previously asked firms in December last year to refrain from new cash-like events and advertising related to overseas investment, citing a weak won and investor protection, among other reasons. The industry says overseas stock marketing was scaled back afterward and firms feel burdened about proactively resuming events even ahead of Chuseok.

An industry official said the situation is not one in which events are not being held because authorities have issued new guidelines to restrain overseas stock marketing. The official added that brokerages remain conscious of the authorities' initial stance, keeping a cautious mood around overseas stock marketing.

The reaction shows that when deciding whether to resume new events, firms consider not only their own sales strategies but also regulators' views and other brokerages' moves. The industry appears hesitant to move first as it gauges the timing for resuming marketing.

Financial authorities have recently also stressed investor protection related to overseas investment sales. The Financial Supervisory Service held a meeting on Sept. 21 at the Financial Investment Association with compliance officers from 21 securities firms and provided guidance on internal control precautions related to overseas investment, which has been increasing again recently.

The FSS asked firms to reflect effective investor protection indicators in key performance indicators, and to strengthen internal controls related to events and investment advertising. Items for review also included tighter selection and management of overseas local brokers and streamlining procedures for calculating fee rates for investors' foreign currency deposits.

Requests disclosed at the meeting focused on rechecking investor protection procedures rather than a blanket suspension or ban on overseas stock events. The aim was to ensure internal controls function properly in planning and operating events and advertising.

The FSS also reviewed implementation of a "comprehensive advertising work improvement plan" announced on Sept. 1 and urged firms to strengthen internal controls to eradicate false and exaggerated advertising. Participants from securities firms said they would strengthen management and inspections so recently introduced systems, including advertising regulations, can take root.

At the meeting, Seo Jae-wan (서재완), an assistant governor for the financial investment sector at the FSS, stressed that securities firms' responsibilities as financial institutions have also grown in line with their expansion. He urged compliance departments to play a control and management role from the product planning and review stage, and said management should support them with sufficient authority and human and material resources.

In the industry, some also expect that leading large brokerages resuming overseas stock events could become a catalyst for a change in mood.

A securities industry official was quoted as saying, "If one firm resumes overseas stock marketing first, other companies could follow," adding, "For now, the industry as a whole is mindful of authorities' previous request."