Alphabiz - Korean Regulator Issues Warning to Shinhan Securities Over Derivatives Violations

Photo courtesy of Yonhap News

[Alpha Biz= Ellie Kim] SEOUL, May 26 — Financial Supervisory Service has issued an institutional warning to Shinhan Securities for multiple regulatory violations related to its derivatives business.

According to the regulator, the firm failed to designate a required head of derivatives operations for an extended period while continuing to conduct over-the-counter derivatives trading. In addition, tens of thousands of equity swap transactions were executed without the mandatory approval of the designated supervisor.

The watchdog also found that the company lacked proper internal control standards to prevent unauthorized trading approvals and had inadequate risk management practices. In one instance, a department exceeded its net position limits multiple times—by up to fourfold—without corrective action from the risk management unit.

Further, Shinhan Securities was found to have understated operating profit by approximately KRW 79.4 billion in its financial statements due to inaccurate recognition of derivatives-related gains and losses.

Alongside the institutional warning, the regulator imposed disciplinary actions on multiple executives and employees, citing systemic control failures.

Alphabiz Ellie Kim 인턴기자(press@alphabiz.co.kr)