KOR

Research Staff

Research Staff

Lee, Hyo Seob Senior Research Fellow, Head of Financial Services Industry
Secretary General, Secretariat of Seoul IB Forum

Profile

Education
Ph.D. in Finance, KAIST Business School
B.A. in Mathematics(double major in Computer ScienceEngineering), POSTECH
Professional Experience
Korea Capital Market Institute(2010.6~present)
- Senior Research Fellows
- Research Areas: Financial Economics, Asset Management, Derivatives
Visiting Scholar at San Diego State University(2018.1~2018.12)
- Finance Department
KAIST Business School(2010.9~2011.12)
- Visiting Professor of MBA Program
KAIST Student Investment Fund(2008.3~2010.2)
- Managing Fellow
Penta Security Systems(2000.12~2004.5)
- Computer Programmer, work for military service

Publications

Opinion

Directions for Improvement in Internal Controls of Financial Firms / May. 18, 2021
In developed nations including the US, internal controls have functioned as a useful incentive―not as a tool for imposing penalties―that provides penalty reductions under the premise of strong supervisory responsibility. In Korea, however, it is relatively harder to hold top-level supervisors liable for administrative offenses. Hence, the Act on Corporate Governance of Financial Companies allows to sanction CEOs for neglecting their duty to establish internal controls. Although Korean financial firms view internal controls as part of regulation, a substantial number of them fail to view them as part of enterprise and operational risk management, and thus are passive about devising and complying with their own internal control standards. This article presents three conditions that could give financial firms an incentive to exert self-inflicted effort to improve their internal controls. First, supervisory responsibility should be strengthened. Second, internal controls should be used as a useful incentive that enables penalty reductions. Third, the duty to establish internal control standards should be governed by self-regulation, rather than be mandated by law.
Digital Innovation in Global Securities Industry under Covid-19 and the Implications / Dec. 08, 2020
Korea’s securities firms, already known for a highly concentrated business portfolio, have seen their dependency on brokerage even growing higher under the Covid-19 pandemic. With the competition in non-face-to-face financial services expected to intensify further in the pandemic era, those firms should come up with a strategy of diversifying their revenue structure via firm-wide digital innovation. More concretely, they are needed to expand non-face-to-face, tailored wealth management services, and to invest more in innovative startups, while on another front leveraging AI and big data technology seeking to broaden their brokerage services to a wider range of products including unlisted stocks, corporate bonds, and other ESG-related financial investment products.
Korea’s Green New Deal and Challenges Ahead of Capital Markets / Aug. 04, 2020
Recently, Korea’s government has unveiled the Green New Deal policy in its move to overcome social and economic crisis triggered by the Covid-19 pandemic, and ultimately to reshape the economy to be a leading power. Governments in developed economies and private sector financial firms have already set clear goals such as tackling climate change and shifting towards renewable energy in their effort to cut greenhouse gas emissions. Towards that end, they have vigorously engaged in socially responsible investing, for example, issuing a large volume of green bonds, and investing heavily in green infrastructure. It’s time for Korea’s financial services firms to engage more in issues such as climate change, green infrastructure, and renewable energy transition by giving their support to the Green New Deal policy. This can be done by investing more human and physical capital in key environmental issues. More concretely, they need to internalize those issues in their mid- to long-term business objectives, and accordingly to increase their SRI in green bond issuance and other carbon-neutral projects. Also, further effort should be made to develop a Green New Deal index and a systematic rating system that assesses the environmental category of ESG scores, while launching more financial investment products linked to the Green New Deal. Last but not least, they need to work hard on promoting derivatives on emissions rights, which will eventually help cut greenhouse gas emissions and stabilize the emissions trading market.
Regulation of Retail Structured Products: Overseas Cases and Implications / Nov. 05, 2019
At the wake of massive losses in DLF products in Korea, there’re increasing voices calling for tougher regulation on distribution channels of retail structured products. A comparative look at the regulation between Korea and selected developed countries reveals that regulatory arbitrage appears to be insignificant, although sizable differences are observed in the level of sanctions and the fee scheme. Based on the findings, this article proposes five regulatory improvements that are expected to steer Korea’s retail structured product market in desired directions. First, a mis-selling fine should be introduced immediately. Second, it’d better shift the current upfront, commission-based scheme towards a fee-based scheme linked to performance. Third, it’ s necessary to strengthen the suitability principle and post-sales practices for sales of privately placed funds. Fourth, financial advisers selling structured products should be obligated to meet tougher qualifications. Fifth, regtech and other tools are needed to bolster compliance in terms of the sales process in banking channels.

Seminar Presentation