As stock loans in the online investment-linked finance sector surge due to a booming stock market, financial authorities are stepping up risk management measures. The aim is to limit the scale of new stock loans and set individual borrower limits to prevent a decline in financial soundness due to concentration in specific products.
On July 15, financial authorities announced that they will implement administrative guidance starting July 16 as part of their 'Risk Management Measures for Stock Loans in the Online Investment-Linked Finance Sector.' Stock loans allow investors to borrow additional funds using their owned stocks as collateral for further stock investments.
According to the new measures, online investment-linked finance companies must manage the amount of new stock loans issued each month to within 30% of the previous month's new linked loan amount (excluding stock loans). However, if the stock loan balance at the end of each month after July remains below the level recorded at the end of June, this limit will not apply.
Additionally, the balance of stock loans for each borrower will be capped at 1 billion won to prevent excessive concentration on specific borrowers or stock loan products.
The move by financial authorities comes in response to a sharp increase in stock loans within the online investment-linked finance sector. As of the end of June this year, the balance of stock loans in this sector reached 898.3 billion won, a 71.5% increase (374.5 billion won) from the end of last year, which was 523.7 billion won.
Through this administrative guidance, financial authorities aim to prevent excessive expansion of stock loans in the online investment-linked finance sector and maintain financial soundness.
The authorities stated, 'We plan to closely monitor the implementation status of the risk management measures for stock loans by each online investment-linked finance company and, if necessary, guide the strengthening of risk management through meetings with management.'
* This article has been translated by AI.
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