Concerns Raised Over Fair Trade Commission Consultation in STO Exchange Licensing
Controversy is brewing over the licensing process for a secondary trading platform for security tokens (STO),with accusations that the Financial Services Commission (FSC) failed to adequately fulfill its obligation to consult with the Korea Fair Trade Commission (KFTC) regarding potential mergers and acquisitions. As interpretations of related laws suggest prior consultation is a mandatory procedure, the issue could escalate into a dispute over the legitimacy of the licensing process.
according to financial sources on January 23rd, the FSC did not file a separate corporate combination report with the KFTC regarding a consortium established by the korea Exchange and Nexttrade. Moreover, it remains unconfirmed whether the FSC engaged in prior consultation with the KFTC during the licensing review of the two consortia. The FSC maintains that consultation with the KFTC can be conducted at the final licensing stage. however, differing opinions suggest consultation should occur from the preliminary licensing stage, indicating a potential dispute over timing.
financial Industry Restructuring Act: applying the Two Consortium cases
The core of this controversy lies within the Financial Industry Restructuring Act. This law stipulates that financial institutions and their affiliated financial institutions must obtain prior approval from the FSC when acquiring 5% or more ownership of another company or exerting significant control. Specifically, this applies when:
* A financial institution holds 5% or more of the voting stock of another company.
* A financial institution or its affiliated corporate group can effectively control the company.
* Ownership is held by the highest shareholder or, even when divided among multiple shareholders, is deemed capable of de facto control through the exercise of voting rights and other factors.
When approving or licensing the stock ownership of financial institutions, the FSC must consult with the KFTC beforehand to determine whether the stock ownership could substantially restrict competition in the relevant market.
