The Financial Services Commission (FMC) has identified high-frequency trading (HFT) as one of the factors amplifying stock market volatility and is currently preparing regulatory measures.

Byun Je-ho, Director General of the Capital Markets Bureau at the FMC, made the remarks during a keynote speech at "Korea Premium Weeks 2026," South Korea's largest capital market corporate presentation (IR) event held at The Grand Lotte Seoul in Jung-gu, Seoul, today (the 28th), stating that the authorities are "strengthening responses to potential risks in the stock market."

Director General Byun stated, "During last June and July, the concentration in the semiconductor sector combined with increased leverage amplified market volatility, followed by a sharp correction. Although it was a painful experience, it was a time to learn a step ahead how to respond to crisis situations that may emerge in a new market environment."

He went on to emphasize, "We will thoroughly manage leveraged investment products and credit-based margin transactions. Excessive leverage can amplify investor losses and market volatility. Moving forward, the market should grow based on corporate performance and investors' own capital rather than the power of leverage."

At the same time, he stated, "Regarding high-frequency trading, which expands market volatility, we are reviewing appropriate regulatory measures."

However, specific regulatory methods were not disclosed on this day.

High-frequency trading is a trading technique that uses high-speed computers and algorithms to repeatedly place and cancel large volumes of orders in microsecond units, realizing profits from minute price differences.

He also added, "To prepare for situations difficult to address with conventional tools alone, we will strengthen the government's emergency market stabilization measures and actively respond to reckless investment recommendations and market-disturbing activities by finfluencers."

He also revealed plans to introduce the "bear hug" system.

A bear hug is a strategy where a prospective acquirer publicly presents attractive acquisition terms to a target company, compelling its board of directors to review them and mandatorily state their position.

Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il also mentioned the need to introduce bear hugs as a measure to resolve "stock price suppression" during a press conference when he was a nominee.

Director General Byun expressed expectations that "the bear hug, combined with the duty of loyalty to shareholders, will induce the board of directors to objectively express opinions from the standpoint of all shareholders rather than just controlling shareholders."

In addition, he stated that restructuring of the KOSDAQ market will continue, including the delisting of penny stocks and low-market-capitalization companies.

However, he added, "There may be complaints from some companies and investors," while noting, "We will sufficiently listen and communicate."

(Photo: Yonhap News)