South Korea’s Fair Trade Commission (FTC) imposed corrective orders and 1.626575 trillion won in surcharges on 15 government bond primary dealers, saying their coordination restricted competition and artificially raised winning yields.
The penalty covers 10 brokerages and five banks. The commission said the dealers shared bid-yield and volume information across 150 government bond auctions held between January 2020 and June 2023. In 145 auctions, dealers also agreed on specific yields or volumes, the commission said. Reuters put the total at about $1.2 billion.
The commission said the dealers coordinated to keep competition from pushing winning yields lower. It said the conduct weakened competition and lifted auction yields. Government bond yields also influence pricing for other financial products and help set interest rates, according to the FTC.
Yonhap News Agency reported that the penalty exceeds the commission’s previous largest single-case sanction: a 1.03 trillion won penalty against Qualcomm in 2016. The FTC did not quantify the yield increase or the government’s fiscal loss.
The commission said it would refer seven firms for investigation: Mirae Asset Securities, NH Investment & Securities, Industrial Bank of Korea, KB Securities, Kiwoom Securities, Korea Development Bank and Korea Investment & Securities.
The Ministry of Economy and Finance said it would consider suspending or revoking the dealers’ primary dealer status after the legal process concludes, Newsis reported. The report gave no timetable for that decision.
