(Nov 11): South Korea’s antitrust regulator imposed a record 1.63 trillion won (US$1.2 billion or RM5 billion) fine on more than a dozen domestic banks and brokerages for colluding in government bond auctions over more than three years, following a yearlong investigation.
The primary dealers exchanged bid-yield information or agreed on yields and volumes in 150 Korean Treasury Bond auctions from January 2020 through June 2023, the Korea Fair Trade Commission said in a statement Wednesday. It found that the dealers reached agreements on specific bid yields or volumes in 145 auctions among them in South Korea’s roughly 1,261 trillion won (US$942 billion) market.
KB Securities, Korea’s fourth largest brokerage by total assets, received the biggest fine of 332.2 billion won, or about a fifth of the total penalty, followed by NH Investment & Securities and Mirae Asset Securities.
“The conduct effectively undermined the competitive auction system and caused losses to the government,” the commission said in the statement. The regulator also filed criminal complaints against seven firms, including Mirae Asset Securities, NH Investment & Securities, Industrial Bank of Korea, KB Securities, Kiwoom Securities, Korea Development Bank and Korea Investment & Securities, with the Serious Crime Investigation Agency.
The actions are expected to promote competition in the government bond issuance market, where barriers to entry are high, and improve the efficiency of public financial management, it added.
Primary dealers are finance-ministry-designated banks and securities firms that participate directly in government bond auctions. The market is dominated by domestic banks, who underwrite, trade and hold government debt in return for benefits including noncompetitive purchase rights and funding support.
The 1.63 trillion won penalty is the largest ever imposed in a cartel case, according to the commission, surpassing the previous record of 747.6 billion won levied on starch makers earlier this year.
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