[Digital Today reporter Sangyeop Oh] The Korea Financial Investment Association expressed regret over the Fair Trade Commission’s sanctions against collusion by 15 primary dealers in Korean treasury bonds, calling the measures excessive. It said large fines and complaints could curb brokerages’ liquidity and business activity and could also weigh on the treasury bond market.

The association said on Tuesday that the sanctions announced by the FTC against primary dealers in Korean treasury bonds were excessive and raised concerns about serious side effects.

It argued that the sanctions could weaken the role and functions of primary dealers at a time when they participate in the issuance and distribution of Korean treasury bonds and support government financing.

It voiced concern that if the sanctions lead to a suspension or revocation of primary dealer status, bond issuance could also face disruptions.

It also said that with overseas investment funds flowing in after inclusion in the World Government Bond Index (WGBI), large-scale sanctions against primary dealers could affect the external credibility of the South Korean market.

The association said fines of several tens of billions of won to hundreds of billions of won per company, along with complaints, could strain brokerages’ liquidity and could affect not only existing business activities but also new licensing.

The association said it views the level of the sanctions and the method used to calculate fines as excessive. It plans to support the industry so it can explain problems with the sanctions and the unreasonableness of the fine calculations through lawful procedures such as administrative litigation.

Hwang Seong-yeop (황성엽), chairman of the Korea Financial Investment Association, said, "I agree with the need to establish a fair market order, but I am deeply concerned about whether these sanctions will weaken the role of primary dealers in Korean treasury bonds and ultimately place a burden on government financing and financial market stability."

He added, "We will work harder to establish a fair market order and strengthen internal controls as a result of this case." He added, "We will do our best to ensure the stable development of the Korean treasury bond market and restore trust in the financial investment industry while communicating closely with the government and relevant agencies."