South Korea's antitrust regulator fined 15 banks and securities firms for rigging government bond auctions. The dealers dispute the collusion finding, and seven of them face a criminal referral.
South Korea's antitrust regulator fined 15 banks and securities firms a combined 1.63 trillion won (about $1.22 billion) on Wednesday for rigging government bond auctions. It is the largest penalty the Korea Fair Trade Commission (KFTC) has imposed in a single case.
All 15 were primary dealers, and they held 15 of the 18 licenses then in operation. The KFTC said their coordination kept auction yields from falling and raised the state's borrowing costs.
Dealers agreed on yields in 145 auctions
The cartel ran from January 2020 to June 2023 and covered 150 auctions. In 145 of them, the dealers agreed on the yields and volumes they would bid, the KFTC said.
Staff traded figures by phone and messenger until one or two minutes before bidding closed. Some firms wrote the routine into handover documents and operating manuals, so it carried on through staff changes and absences.
KB Securities faces the largest fine
KB Securities received the biggest single fine, 332.2 billion won, followed by NH Investment & Securities at 242.8 billion won and Mirae Asset Securities at 214.8 billion won. Shinhan Securities was fined 147.3 billion won.
The KFTC will also refer seven firms to the Serious Crime Investigation Agency, citing their longer involvement. The list includes Mirae, KB, NH Investment & Securities, Kiwoom Securities, Korea Investment & Securities, Korea Development Bank and Industrial Bank of Korea.
Dealers call the contacts routine
During the proceedings, the dealers argued that the contacts were routine market monitoring tied to their market-making duties, according to Korean press reports. The KFTC rejected that argument.
South Korea's finance ministry, which sells its debt through the primary dealers, said it would take no separate action until the decision is final. The firms can still challenge the ruling in court.
Source: Finance Magnates
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