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[Apha Biz=(Chicago) Reporter Paul Lee] Samsung Asset Management has been criticized by financial authorities for its lack of obligation to manage conflicts of interest related to the Exchange-Traded Fund (ETF) stock lending business.
According to the financial investment industry on the 26th, the Financial Supervisory Service notified the results of its regular inspection of Samsung Asset Management conducted in May last year on the 30th of last month. As a result of the inspection, one Samsung Asset Management employee who violated the obligation to manage conflicts of interest under the Capital Markets Act delivered the requirements for self-handling and pointed out two management precautions.
First of all, Samsung Asset Management simplified the lending rate without considering the expected conflict of interest between the ETF investor and the investment broker who borrowed stocks in the process of changing the ETF stock lending business to one operator.
In addition, the Financial Supervisory Service took management precautions, saying Samsung Asset Management should improve the process of checking the appropriateness of synthetic ETF collateral.
It is explained that the process of confirming the appropriateness of the synthetic ETF collateral was insufficient, such as the securities firm providing the ETF as collateral for the ETF swap contract but failing to confirm it. It was pointed out that the procedure to check the adequacy of collateral assets related to the over-the-counter derivatives contract of synthetic ETF should be reflected in the internal regulations.
It was also pointed out that Samsung Asset Management did not reflect in its internal regulations the process of reviewing the fairness of fees and the need for contracts in the process of total acquisition contracts with affiliates.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
