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| The headquarters of Korea Investment & Securities in Seoul / Courtesy of Korea Investment & Securities |
Despite CEO's apology, brokerage criticized for lack of investments in computerized operations
By Anna J. Park
Following a recent 15-hour system failure at Korea Investment & Securities earlier this week, the Financial Supervisory Service (FSS) has begun to look into the case, as the financial watchdog agency has been receiving reports of related facts from the brokerage company.
The financial authority will decide whether to impose sanctions on the firm over the system failure, after thoroughly looking into the reports, if any wrongdoing on the part of the securities firm is confirmed, according to the country's Electronic Financial Transactions Act. For now, the FSS does not have a specific timeline about on-site inspections or sanctions.
"Currently, the FSS is examining reports to figure out facts about the issue with facility experts," an official from the FSS said.
Both the home trading service (HTS) and mobile trading service (MTS) of Korea Investment & Securities failed to function for 15 hours from 4 p.m. on Monday to 7 a.m. the next morning. Retail investors suffered setbacks in their after-hour trading of local stocks as well as trading in U.S. stock markets.
The company explained that the system's power supply had been cut off, as an electrical short circuit took place at its main data processing computer center. It was the day of the heaviest rainfall ever recorded in Seoul, and the firm's headquarters building suffered water leakages at some of its levels.
Jung Il-moon, the brokerage's CEO, issued a statement of apology on the firm's official website, vowing to improve its computerized operating system.
"The company will swiftly respond to customers' inconveniences and complaints to earn their trust back," the brokerage said in the statement. "Keeping deeply in mind the principle that a financial company grows out of customers' trust and love, the firm will do its best to renovate itself to be equipped with the best IT infrastructure and financial services," it added.
Korea Investment will be receiving complaints due to the system failure until Friday this week and plans to compensate any damage.
Despite the apology and compensation plans, the brokerage could not avoid criticism. It was revealed that the firm spent only a fraction of what peer companies had been spending on their computerized operating infrastructure.
According to data released by the Korea Financial Investment Association (KOFIA), Korea Investment & Securities spent a total of 81.3 billion won ($62.3 million) from 2019 to 2021 on its computer operating system. It is only about 35 percent of 226.2 billion won that Samsung Securities spent on its computerized operating system during the same period.
Samsung Securities, which has been allocating the highest amount on its computer infrastructure, spent 82.2 billion won for that purpose last year alone, which is more than what Korea Investment & Securities has been spending during the past three years. Kiwoom Securities spent 195.4 billion won to maintain its computerized operating system during the past three years, while Mirae Asset Securities spent 168.9 billion won over the same period.
