Chairman Hwang Young-key of the Korea Financial Investment Association (KOFIA) said the government is suffering from a reduction in tax revenue since it began to assess tax on securities dealings by the Korea Post.
What he meant was that the government started to charge tax on the Korea Post’s securities transactions from 2013 in the name of boosting tax revenue, but the tax revenue fell after marginal securities transactions market almost came to a standstill — no longer one of the important tax revenue sources in the securities market for the government.
At a media briefing at his office on April 6 on the occasion of his first two months since becoming chairman of the association, the KOFIA chairman said the government’s tax revenues fell at many places soon after taxes were slapped on transactions to increase tax revenue, as transactions began to fall.
Hwang also said transaction taxes on derivative products dealt by individuals should have a scientific proof that tax revenue won’t be reduced, even if a minimum tax was assessed.
The financial investment association chairman also asked the government to do its best to have bills such as the Cloud Fund Law and home visit sales of securities get parliamentary approval this year, as they are needed to spur the capital market. Hwang also called on financial investors to do everything they can to spur the capital market so tat the number of bills the government has been trying to approval would help other government measures to revitalize the capital market and its reform.
KOFIA is the sole self-regulatory organization (SRO) of the Korean financial industry. KOFIA approaches self-regulation as a service that should be responsive, flexible and market-friendly, rather than rigid and heavily supervised. To ensure its ability to effectively conduct its role and function as an SRO, KOFIA maintains the Self-Regulation Committee (SRC). The SRC is responsible for KOFIA's overall self-regulation activities, such as making decisions for the establishment and revision of regulations, and applying penalties to members and executives. The committee is headed by the standing SRC chairman.
KOFIA plays an important role in ensuring the transparency and efficiency of the OTC fixed income market by collecting and disseminating vital trading data. KOFIA runs the Bond Quotation System, which displays bid and ask quotations in real time to aid bond traders in their transactions. KOFIA also provides many other types of bond-related data. All bond transactions must be reported to KOFIA within 15 minutes of the transaction. KOFIA posts the daily yields of 8 types of bonds and 51 closing yields. Among them, the 3-year and 5-year treasury bond yields are the benchmark indicators of the Korean financial market.
In October 2009, the FSC announced the "Plan for Improving the Secondary Bond Market," which focuses on the bond trading system. As a result of this, KOFIA has established and is operating FreeBond, an exclusive bond trading system. FreeBond, which consists of a messenger feature, a chat room, and a trading board, enables financial investment companies and related entities to exchange quotations for trading or brokerage and negotiate with counterparts in the OTC market. As of April 2011, 176 institutions and 1,463 individuals were registered with FreeBond, with 115 institutions and 685 individuals actively logging in to the system to use it. In the future, a complete bond ATS (alternative trading system), equipped with a settlement function, will be introduced.
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