Park Yong-jin Calls for Reform of Securities Subscription Margin System

Park Yong-jin, Vice Chairman of the Presidential Committee on Regulatory Rationalization, has publicly criticized the current subscription margin system used for public offerings of securities, deeming it unfair to investors and primarily beneficial to securities companies. He has called for a review and potential overhaul of the system.

Criticism of the Current System

On March 19, 2026, Vice Chairman Park expressed his concerns on Facebook, stating that investors are required to pay commissions to securities companies while entrusting them with substantial funds, yet do not receive interest on those funds. He argued that this arrangement allows securities companies to profit from investor money without providing reciprocal benefits. He specifically pointed to the large sums collected as subscription margins, citing the LG CNS public offering last year, where 21 trillion won was collected as margin.

Calls for Improvement and Government Response

Vice Chairman Park announced his intention to investigate the structure of the subscription, allocation, and refund process to identify and address any unilateral disadvantages faced by investors. He plans to request improvements from relevant ministries.

During a capital market stabilization and normalization meeting at the Presidential Office on March 18, 2026, President Lee Jae-myung responded to Vice Chairman Park’s suggestions by ordering a review of shortening the stock settlement cycle. President Lee questioned the current T+2 settlement period, asking why it takes two business days to receive funds after selling stocks.

Shortening the Settlement Cycle

Jung Eun-bo, chairman of the Korea Exchange, responded to President Lee’s order by announcing plans to shorten the payment cycle to T+1, aligning with European initiatives. He also suggested that blockchain technology could potentially enable immediate payments in the future. MK Business reported on this development.

However, Vice Chairman Park questioned the timeline of these improvements, noting that a working group consisting of the Korea Securities Depository and the Korea Stock Exchange, along with stakeholders like securities firms, had already been formed in October 2025 to address the settlement cycle. He inquired why progress had been slow, despite the United States already implementing a T+1 settlement system.

Innovative Financial Services and Further Investigation

Vice Chairman Park also highlighted the emergence of innovative financial services, such as those offered by Toss and Kakao, which provide access to stock payment amounts in advance and collect interest within the second business day of the payment cycle. He indicated a commitment to investigate whether technical limitations or opposition from the securities industry are hindering the immediate shortening of the payment cycle.

Regulatory Rationalization Committee’s Role

The newly launched Regulatory Rationalization Committee, with Vice Chairpersons Nam Goong-beom, Park Yong-jin, and Lee Byung-tae appointed in early March 2026, aims to consolidate Korea’s regulatory governance. Sedaily reports that this committee represents a significant shift in regulatory oversight, moving from a fragmented system to a single control tower.

Park Yong-jin, a two-term former lawmaker previously known as a “Samsung sniper” for his regulatory scrutiny, chosun.com, has emphasized his alignment with the Lee Jae-myung administration, stating, “I am Lee Jae-myung’s person and a person of the Lee Jae-myung administration.”