• Does the Korean government still plan to introduce hedge funds this year as it announced earlier?

  • The hedge funds that the Korean government intends to introduce will be much different from those in developed countries like the US and UK in that they will be very limited. We plan to introduce hedge funds within this year, and we are now in the process of laying the institutional foundation for that. In particular, we have established a limitation on borrowing and payment guarantee related to excessive borrowing and derivatives transaction, which are pointed to as causes of side-effects of hedge funds.

    < first-phase introduction of hedge funds >

    ич Hedge funds shall be managed only by asset management companies approved by the Financial Services Commission.

    иш Asset management companies must operate within clearly set regulations that pertain to borrowing, derivatives trading, debt guarantee and collateral.

    ищ A minimal regulatory mechanism shall be established that requires reports on current debt level and derivatives transaction status.

    Korea already has various supervisory mechanisms in place, including the mandate to report the current status of borrowing and derivatives transaction.

    Thus, considering the need to increase market liquidity, finance new growth engine industries and to offer a variety of investment options, it is not desirable to postpone the introduction of hedge funds.

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