It has been confirmed that securities companies will soon be required to submit advertisements related to new ETF (exchange-traded fund) products posted on their own websites or SNS (social networking services) for review by the Korea Financial Investment Association. Previously, only internal reviews were conducted before publishing ads on company websites or SNS, but going forward, ad execution will become significantly stricter.
According to the financial investment industry on the 27th, a Task Force (TF) jointly established by the Financial Supervisory Service and the Korea Financial Investment Association with securities firms to improve overall advertising regulations for securities companies has finalized a comprehensive revision plan. The revised plan was reportedly presented to the Financial Consumer Protection Advisory Committee of the Financial Supervisory Service on that day, and an official announcement is expected shortly.
The core of the revision plan requires securities companies to obtain approval from the Korea Financial Investment Association before posting video content related to new ETF product launches on their own websites or SNS. Under current regulations ('Regulations on Business and Operations of Securities Companies'), review targets include appearances and advertisements on YouTube channels outside the company, portal site banners, outdoor advertising materials, and other ads primarily utilizing external channels. Promotional content posted on securities companies' operated websites or SNS could previously be executed with only internal compliance officer reviews. With this revision expanding the scope of review targets, the Korea Financial Investment Association's notification period for review results is expected to increase from 3 business days to 7 business days.
This revision plan was developed due to concerns that false or exaggerated advertisements cannot be adequately filtered through securities companies' internal controls alone. At its first meeting (kick-off) in April, the TF pointed out that as competition for ETFs intensified, securities companies had published advertisements without properly adhering to existing laws and regulations. As an example of insufficient cases, it cited dividend product advertisements that definitively expressed returns with phrases like "You can receive monthly rent-like money." Other prohibited expressions during advertising include displaying unrealized rates of return, false claims, or exaggerations.
However, given the current shortage of review personnel within the Korea Financial Investment Association, it remains to be seen whether this revised plan can be effectively implemented. Recently, product launches have become increasingly active, with 16 new ETFs listed in just one month alone, intensifying advertising competition as well. In June, Hwang Sung-yeop, chairman of the Korea Financial Investment Association, stated, "The volume of advertisements from member companies is enormous, making it difficult to review all of them; we are also exploring ways to utilize AI (artificial intelligence)." Currently, only five personnel are dedicated to advertising reviews within the Korea Financial Investment Association.
While the financial investment industry agrees with the TF's purpose, questions remain about whether the Korea Financial Investment Association can adequately handle the increased volume of review work. Securities companies also express concern that as the workload for review procedures increases, timely promotions may not be achieved. An industry representative stated, "The current structure assigns multiple securities companies to each review personnel within the Korea Financial Investment Association, resulting in a heavy workload even now," and added, "As the market changes rapidly, extending the review period could result in advertisements being released at times that no longer align with market conditions."
Critics also argue that the Korea Financial Investment Association's review procedures need to be reorganized. Earlier, Korea Investment Trust & Management faced allegations of misleading investors through advertisements during the launch of its 'ACE US Space Tech Active' ETF by implying that inclusion in SpaceX's IPO had been confirmed. However, some of the advertisements executed by Korea Investment Trust & Management at the time did undergo review by the Korea Financial Investment Association. Another representative noted, "While it is true that some securities companies caused controversy through exaggerated advertising, the Korea Financial Investment Association also failed to filter out problematic advertisements through its review process," and added, "If we apply the revised plan uniformly to securities companies without properly establishing review principles, it could constrain industry growth."
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