South Korea’s FSS Orders Financial Institutions to Strengthen Market Risk Management

South Korea’s Financial Supervisory Service has asked financial institutions to strengthen market stability measures and forward-looking risk management. According to Odaily, the regulator said it will monitor securities firms’ margin trading and securities lending and borrowing to limit losses for individual investors if market volatility increases. The FSS also said it plans to push some financial and insurance companies to reduce asset-liability duration mismatch risks as they may face solvency pressure. FSS Governor Lee Chan-jin said that with rising volatility in the Korean stock market, continued tensions in the Middle East and increasing expectations of further U.S. rate hikes, financial market volatility may widen further. He added that relevant institutions should prepare adequately and keep monitoring the operation of the foreign exchange market’s 24-hour trading mechanism, as well as the financing and operating conditions of financial institutions.