Financial Supervisory Service (FSS) Governor Lee Bok-hyun speaks during a meeting with CEOs of brokerage companies in Seoul, Wednesday. Courtesy of FSS

CEOs from 16 securities companies have requested financial authorities to reconsider the implementation of the controversial Financial Investment Income Tax scheduled for early next year.

During their meeting with Financial Supervisory Service (FSS) Governor Lee Bok-hyun in Seoul, Wednesday, the 16 brokerage firms jointly expressed their concerns about the practical difficulties of rolling out the new tax scheme at the start of next year.

They cited several issues, including the lack of detailed tax collection standards, which makes it virtually impossible for companies to preemptively prepare their systems. They also highlighted the challenges of accurately calculating profit and loss due to limitations in information sharing between institutions. Additionally, the firms pointed out potential customer declines at small and medium-sized brokerage firms due to the inconvenience of tax payment sytems, and the reduction of investment resources available to investors.

The 16 securities companies that attended the meeting included 14 Korean firms — Mirae Asset, NH, Korea Investment & Securities, Samsung, KB, Shinhan, Meritz, Hana, Kiwoom, Daishin, Kyobo, Hanwha, Kakao and Toss — and two foreign firms, JPMorgan and UBS.

Conveying such concerns to the head of the state-run financial regulator, the CEOs emphasized that the implementation of the financial investment income tax should be postponed until necessary improvements are made.

They suggested that the investment income tax payment system be modified to the current method used to collect capital gains tax on foreign stocks. Some CEOs also advocated for a complete reconsideration of the tax from scratch, if the government truly aims to invigorate the domestic capital and stock markets.

Financial Supervisory Service (FSS) Governor Lee Bok-hyun, fourth from left, speaks during a meeting with CEOs of brokerage companies in Seoul, Wednesday. Courtesy of FSS

The FSS chief responded that he would faithfully reflect the brokerage industry's opinions in market supervision.

At the same time, Lee urged the CEOs to continue to play a significant role in stabilizing real estate project financing, assume greater accountability to strengthen internal controls and stably establish a short selling electronic system as a matter of necessity.

"It is necessary for securities companies to shift their focus from real estate and alternative assets and take on a greater role in supplying high-quality capital to innovative venture companies in areas such as AI and big data, which will drive the country's future growth," the FSS governor said during the meeting.

He also urged the CEOs — the final parties in charge of internal control matters — to make their utmost efforts to prevent their employees from committing financial crimes, in hopes of changing the industry's highly concerning track record of embezzlement cases.