Press Releases - Financial Services Commission

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Nov 14, 2018

SFC's Final Ruling on Samsung BioLogics

The Securities and Futures Commission (SFC) ruled that Samsung BioLogics intentionally violated accounting rules by changing the accounting treatment of its stake in Samsung Bioepis from book value to fair market value in 2015.The SFC decided to recommend dismissal of Samsung BioLogics’ chief executive; impose a fine of KRW 8 billion; and refer the case to prosecutors.Samjong KPMG, Samsung BioLogics’ auditor, will be imposed a fine of KRW 170 million and banned from auditing the company over the next five years for its gross negligence; and ordered to suspend duties of involved accountants. Deloitte Anjin will be barred from auditing Samsung BioLogics over the next three years for its negligence.The imposition of a fine exceeding KRW 500 million and suspension of duties will be finally determined by the Financial Services Commission (FSC) in accordance with the Financial Investment Services and Capital Markets Act and the Certified Public Accountant Act.Upon the SFC’s ruling, the Korea Exchange (KRX) will suspend trading of Samsung BioLogics’ stocks temporarily while it reviews whether the company is eligible to remain listed.* Please refer to the attached PDF for details.
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Jul 17, 2018

FSC Reshuffles Organizational Structure

The FSC plans a major organizational reshuffle to better protect financial consumers and proactively respond to financial innovation in the fourth industrial revolution era.FINANCIAL CONSUMER BUREAU TO BE CREATEDThe newly-created Financial Consumer Bureau will undertake overall responsibility for financial consumer protection, currently scattered around the sector-specific bureaus. The new bureau will also assume responsibility for household debt policy on top of microfinance policy for financially marginalized households.The current Capital Markets Bureau will be renamed as Capital Market Policy Bureau under the new Financial Consumer Bureau. The current Banking Insurance Bureau will be reorganized into Financial Industry Bureau.FINANCIAL INNOVATION BUREAU TO BE CREATEDThe new Financial Innovation Bureau will be tasked with policy initiatives for financial innovation – e.g. innovative financial services using fintech or big data and responses to new developments and challenges such as cryptocurrencies.* Please refer to the attached PDF for details.
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Jul 12, 2018

SFC's Ruling on Samsung BioLogics

The Securities and Futures Commission (SFC) on July 12, 2018 announced its ruling on Samsung BioLogics:▪ The SFC concluded that Samsung BioLogics had violated accounting standards by intentionally omitting information regarding its joint venture agreement with Biogen in its public disclosure; therefore, the SFC approved measures against Samsung BioLogics − request for dismissal of executives in charge; designation of external auditors for three years; and referral of the case to prosecutors.▪ The SFC also decided to restrict Samjong KPMG, Samsung BioLogics’ auditor, from auditing the company for four years; and report the accounting company and its accountants to prosecutors for violation of auditing standards.* Please refer to the attached PDF for details.
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Apr 04, 2018

Result of 2018 Annual General Meetings of Listed Companies

BackgroundThis year marked the first time that listed companies held Annual General Meetings (AGMs) of shareholders since the abolition of the so-called ‘shadow-voting’ practice at the end of last year. Under the shadow-voting system, companies were allowed to use shares registered with the Korea Securities Depository (KSD) to meet quorums to pass resolutions at AGMs. The abolition of such practice would pave the way for encouraging minority shareholders to participate in AGMs. At the same time, it could pose challenges for some companies to secure minimum quorums required to vote on resolutions at AGMs.Against this backdrop, the FSC has taken measures to boost participation of minority shareholders via electronic voting and enhance awareness of the importance of AGMs for both companies and shareholders. The FSC also launched a taskforce with securities-related institutions and business associations to provide companies with support for smooth operations of AGMs this year.Statistics of 2018 AGMsA total of 1,993 companies – 741 Kospi-listed and 1,192 Kosdaq-listed – held AGMs as of March 30. Out of which 76 companies – 5 Kospi-listed and 71 Kosdaq-listed – failed to meet quorums required to vote on resolutions at AGMs. The agenda items which fell short of minimum quorums for voting include appointment of auditor (56 companies); amendment to the articles of incorporation (8 companies); approval for financial statements (4 companies); approval for executive compensation plans (4 companies); and appointment of board directors (4 companies).Use of electronic votingThe number of companies using electronic voting decreased from 688 last year to 486 this year . Meanwhile, the number of shareholders who exercised their voting rights vial electronic voting rose to 36,000 this year, more than three times bigger than last year. The ratio of electronic votes has also more than doubled from 1.76% last year to 3.9% this year.Result of support for AGMsSecurities-related
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Mar 23, 2018

Mandatory Disclosure of Corporate Governance to be Phased in from 2019

The FSC and KRX plan to introduce mandatory disclosure of corporate governance into Kospi-listed companies with total asset value of more than KRW 2 trillion, starting from 2019, and phase it into all Kospi-listed companies over the next two years.BackgroundKorea introduced the “comply or explain” approach for corporate governance disclosure in March 2017, in which, on a voluntary basis, companies either comply with corporate governance principles, or explain publicly why if they do not comply.However, the voluntary disclosure has revealed some limitations including low participation of companies and poor quality of disclosed information, making it difficult to provide market participants with sufficient information about corporate governance such as a company’s decision-making structure and internal controls.Against this backdrop, the FSC came up with its plan to improve listed companies’ disclosure of corporate governance, based on discussions with relevant institutions including the KRX and the results of a survey conducted on listed companies.Key changes1. Mandatory disclosure of corporate governanceStarting from 2019, Kospi-listed companies with total asset value of more than KRW 2 trillion will be required to mandatorily disclose their corporate governance. The FSC considers expanding the mandatory disclosure to all Kospi-listed companies starting from 2021.※ The FSC is also considering introducing mandatory disclosure of corporate governance toKosdaq-listed companies. Details including the timing of introduction are left for further discussions.2. Guidelines on corporate governance disclosureTo improve the quality of disclosed information, guidelines will be provided to specify details of corporate governance principles that corporate governance reports must entail. That will enable investors to compare corporate governance information among listed companies and provide stakeholders with more useful information.※ The guidelines will be set out by
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Mar 15, 2018

Plan to Improve Corporate Governance of Financial Companies and Relevant Regulations

The FSC announced its plan to amend the Act on Corporate Governance of Financial Companies and its subordinate regulations, aimed to address problems found in the actual practice of implementing corporate governance rules by financial companies.BackgroundCorporate governance of financial companies calls for greater scrutiny than that of non-financial companies because financial companies run their businesses with the people’s money; and their management failures could impact the national economy as a whole.After the global financial crisis, international organizations including OECD, FSB and G20 have made proposals to improve corporate governance of financial companies.Korea has also made progress in financial companies’ corporate governance. In the wake of the Asian financial crisis in 1997, financial companies adopted outside directors and an audit committee within their board to keep the management in check. After the global financial crisis in 2008, best practice guidelines on outside directors and compensations schemes were established. All these efforts paved the way for the enactment of the Act on Corporate Governance of Financial Companies in July 2015, which came into force in August 2016.Despite these improvements, corporate governance of financial companies in practice still falls short of expectations of shareholders and financial consumers in ensuring transparency and accountability.The management often exerts undue influence on nomination of its chief executive officer (CEO) and outside directors, undermining independence and fairness in the nomination process. Such practice hinders outside directors from holding the management in check and making independent decisions.The current fit-and-proper test for majority shareholders also has more room to improve. The Act on Corporate Governance of Financial Companies introduced a periodic test into non-banking financial companies to assess their largest shareholders’ fitness and propriety; however, the
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Feb 01, 2018

Plan for Comprehensive Supervision of Financial Conglomerates

The FSC outlined its plan to introduce a comprehensive supervisory framework for financial conglomerate, one of the government’s financial reform agendas.The plan is to set out key policy tasks and principles for the supervision of financial conglomerates.ObjectivesThe comprehensive supervisory scheme is intended to capture and manage a full spectrum of their group-wide risks that conventional sectoral supervision cannot fully address. With the introduction of comprehensive supervisory framework, the FSC intends to close regulatory gaps between holding and non-holding types of financial groups by applying the same standards corresponding to their risks.The comprehensive supervisory scheme will also help prevent any possible contagion of group-wide risks into financial affiliates.Key Policy Tasks1. Comprehensive Supervisory Scheme► Scope of applicationAny group of companies with financial affiliates of KRW5 trillion or more in assets in at least two sectors of banking, insurance or securities will be subject to comprehensive supervisory rules.※ Financial holding companies, already regulated by the Financial Holding Company Act, and financial groups whose other financial business besides their main financial business is below a certain threshold (e.g. 5%) of assets or equity capital of the group or of the sector’s market share will be excluded.► Realignment of supervisory frameworkA consultative body, which consists of a group-level supervisory department and sectoral supervisory departments in the group’s financial affiliates, will be created to clarify responsibilities and facilitate coordination in group-wide supervision.► Reporting and disclosure requirementsA financial conglomerate under comprehensive supervision will be required to report its group-wide capital adequacy and aggregate risk management to the supervisory authorities on a regular basis and disclose the information to the public.2. Comprehensive Risk Management Scheme► Comprehensive r
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Nov 21, 2017

The 4th UK-Korea Financial Cooperation Forum Held in Seoul

The Korean Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) hosted the fourth UK-Korea Financial Forum in Seoul today with the UK Treasury, the Financial Conduct Agency (FCA) and the British Embassy. The annual event, which took place alternately in London and Seoul since 2014, has served as an occasion to deepen cooperation between the UK and Korean financial regulators and expand business opportunities for both countries’ financial companies.This year’s forum focused on new challenges facing financial services sectors in both countries: falling fertility rates, ageing population and evolving technology. These changes will bring opportunities as well as threats to the financial sector. In this context, topics of this year’s forum included “the Future of the Insurance and Pension Industries” and “How to Promote Innovation in Financial Services.” The forum was attended by Korean and UK officials, financial companies and fintech businesses.In his opening speech, Choi JongKu, Chairman of the FSC said, “The UK has traditionally been a leader in finance and continues to lead in recent trends including fintech, which provides useful policy implications for Korea.” He also stressed the importance of continued cooperation in dealing with new risks that might come from the development of digital finance.In the following session, Andrew Bailey, Chief Executive Officer of the FCA delivered a speech titled “Public Policy Challenges for Consumer Protection Regulators.” In his speech, Mr. Bailey shared the findings and policy implications from the Ageing Population Project, which the FCA launched in February in 2016 to explore how the ageing population would impact the financial services industry. He emphasized the role of financial regulators needs to evolve, corresponding to changes in financial services with ageing population.On the sidelines of the forum, FSC Chairman Choi JongKu held a meeting with UK officials including K
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Apr 13, 2017

New Approach to Corporate Restructuring

FSC Chairman had a meeting with CEOs of commercial banks on April 13 to set out a new approach to corporate restructuring. The new approach was outlined to complement the existing framework of corporate restructuring; and to shift its focus to more market-based restructuring schemes, in which capital market players including private equity funds (PEFs) play a bigger role in corporate restructuring.I. BACKGROUNDThe existing system led by creditor banks has limits as companies today, which used to heavily rely on bank loans, are increasingly using capital markets for fundraising via issuance of corporate bonds or commercial papers (CPs). Such a change made the process of adjusting the interests of creditors more complex and difficult. Against this backdrop, the FSC outlined a new approach to corporate restructuring aimed at improving the current restructuring system led by creditor banks and stimulating capital market-based restructuring schemes through PEFs.II. NEW APPROACH TO CORPORATE RESTRUCTURING1. Credit Risk Evaluation System To Be Improved▪ Banks will be required to revise their credit risk evaluation models and procedures withinthe second half of this year to make more accurate and rational evaluations so that they could sort out troubled companies to be put under restructuring in a timely manner.▪ For companies under a workout program led by creditor banks, banks will have to adoptstricter evaluation standards to decide whether to continue the workout program or not. If the workout program proved inefficient, the company undergoing the workout would swiftly turn to alternative schemes such as a buyout plan led by PEFs or court receivership including the newly-introduced ‘Pre-packaged Plan’ (or ‘P-Plan’).▪ For those who have been under workout program for more than three years, an extensionof the workout period will be permitted only in exceptional circumstances after a thorough evaluation by an external auditor.2. Market-based Restructuring Sch
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Nov 13, 2016

Seven Investors Were Picked to Buy Government's Stake in Woori Bank

*Please read the attached file for details.The government decided to sell its 29.7% stake in Woori Bank to seven investors on its fifth attempt to privatize Woori Bank since 2010. The seven final winning bidders and amount of shares auctioned to each bidder are as follows: Investors % of auctioned shares1 Eugene Asset Management 4.0%2 Hanwha Life Insurance Co., Ltd. 4.0%3 IMM Private Equity, Inc. 6.0%4 Kiwoom Securities Co., Ltd. 4.0%5 Korea Investment Securities Co., Ltd. 4.0%6 Mirae Asset Global Investments Co., Ltd. 3.7%7 Tongyang Life Insurance Co., Ltd. 4.0%The government would recoup KRW 2.4 trillion from this sale, recovering a total of KRW 10.6 trillion out of KRW 12.8 trillion, which is 83.4% of the public funds injected into Woori Bank. We will continue our effort to sell the remaining 21.4% in Woori Bank for a full recovery of the public funds. The sale will be closed in mid-December this year. The Korea Deposit Insurance Corporation (KDIC) will terminate its MOU with Woori, signed for helping normalizing the bank’s business operation, as soon as the sale is closed, to guarantee the new shareholders autonomy in the bank’s management.
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Sep 26, 2016

Preliminary Bidding Result for Sale of Woori Bank

Eighteen investors submitted letters of intent (LOI) to buy the government’s 30% minority stakes in Woori Bank in a preliminary bidding. The amount of stakes for which the investors bid adds up to 82 to 119 percent shares of Woori Bank. * The name of individual investors and amount of the bid each investor made cannot be disclosed upon their request.The investors who submitted LOIs will be given opportunity to conduct due diligence in end-September. Shortlisted bidders will submit final offers in mid-November to close the sale by the end of the year.Schedule - Sending Information Memorandums(IM) and conducting due diligence (Sept.30~)- Deadline for submission of final offers (5:00 p.m., Nov.11)- Announcement of winning bidder (Nov.14)- Signing of contract and payment (Nov. 28)* The schedule may be subject to change depending on progress in the sale process. *Please read the attached file for details.
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Sep 06, 2016

Financial Assistance to be Provided for Hanjin Shipping's Local Contractors

The Financial Services Commission (FSC) and Financial Supervisory Service (FSS) came up with measures to support Hanjin Shipping’s local contractors in a bid to minimize spill-over effects of Hanjin’s filing into small local contractors. Current Situation of Hanjin Shippings’s contractorsTotal 457 subcontractors have receivables from Hanjin Shipping, which account to approximately KRW 64 billion as of end-June 2016. (as of end-June, 2016)Supportive Measures1. Government will provide financial assistance for subcontractorsThe government will swiftly provide emergency financial assistance for subcontractors and small-to-mid sized shippers. The Korea Development Bank (KDB), Industrial Bank of Korea (IBK), Korea Credit Guarantee Fund (KODIT), and Korea Technology Finance Corporation (KOTEC) will extend maturity for principal repayment of outstanding loans and guarantees by one year. The FSS will encourage commercial banks to grant grace period and extend maturity as well.The KODIT and KOTEC will provide special guarantees for subcontractors and small-to-mid sized shippers suffering from cargo delay. Up to 90% guarantee will be provided for debts of such companies and guarantee fee will be reduced by 0.2%. The guarantee will be provided by using the KRW 800 billion restructuring fund allocated in the supplementary budget. The KDB and IBK will offer emergency financial assistance to the subcontractors with temporary liquidity shortage. The KDB will grant loans worth KRW 5 billion to small-sized firms and KRW 7 billion to medium-sized ones. The IBK will provide KRW 300 million to SMEs at a rate discounted by 0.5%p. The KODIT and KOTEC will provide special guarantee with higher guarantee ratio (90%) and lower fee (↓0.2%) for SMEs whose corporate restructuring plan has been approved by the government under the Special Act on the Corporate Revitalization. The KDB will provide special loans worth total KRW 2 trillion to SMEs willing to restructure their business thr
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Sep 02, 2016

Follow-up Measures on Hanjin Shipping's Filing for Court Receivership

FSC Chairman Yim Jong-yong held a meeting on September 1 with the Korea Development Bank (KDB) and Hyundai Merchant Marine (HMM) to discuss follow-up measures regarding Hanjin Shipping’s filing for court receivership. Chairman Yim asked the KDB and HMM to exert their utmost concerted efforts to minimize problems with cargo delivery and shippers in the aftermath of Hanjin’s filing for bankruptcy protection. 1. HMM will immediately go into emergency management to minimize disorder in cargo delivery and damage to shippers. HMM will add to its sea routes the ones which used to be serviced exclusively by Hanjin Shipping – 1 in America, 1 in Europe – and start servicing of more than 13 additional ships as soon as possible. HMM will maintain freight rates for the newly-established routes to an appropriate level to ensure shippers should not face excessive increase in freight rates. 2. The Seoul Central District Court will soon determine whether to accept Hanjin Shipping’s filing, however, since we cannot completely rule out the possibility of Hanjin’s liquidation HMM will immediately form a task force to review its possible acquisition of Hanjin’s healthy assets. The TF will sort out and review Hanjin’s profitable vessels, overseas sales network and key work forces, and devise detailed plan to sell the assets to HMM. *Please read the attached file for details.
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Aug 31, 2016

FSC Statement on Hanjin Shipping's Filing for Court Receivership

FSC Vice Chairman Jeong Eun-bo held a meeting on August 31 with officials from relevant agencies to discuss the possible government’s responses following Hanjin Shipping’s decision to file for court receivership. 1. Impact on financial market will be limited.Hanjin’s filing for court receivership will have only limited impact on financial markets as the event has been already reflected to a considerable extent in the process of restructuring. In the stock market, Hanjin Shipping accounts for 0.03%, worth KRW 401 billion, of Kospi’s market capitalization. Its share price has declined 53.8% from KRW 3,540 per share on January 2 to KRW 1,635 on August 29, 2016. The impact on corporate bond market will be limited as credit ratings of Hanjin Shipping and Korean Air Lines already factored in the event. 2. Impact on financial institutions and corporate bond investors will be limited as well. Creditor banks have set aside loan loss provisions against most of possible losses. The additional amount of loan loss provisions the banks need is estimated to be KRW 0.3 trillion as Hanjin Shipping files for court receivership. The outstanding issuance of corporate bonds has continuously decreased in the restructuring process so far from KRW 2.2 trillion at end-2013, KRW 1.7 trillion at end-2014, KRW 0.8 trillion at end-2015, to KRW 0.5 trillion at end-June, 2016. Most of issued bonds are held by institutional investors. 3. The government will promote acquisition of Hanjin Shipping’s healthy assets by Hyundai Merchant Marine in a bid to maintain competitiveness of the shipping industryIn response to the market concern over the shipping sector, one of Korea’s key industries, the government will make sure to maintain the shipping industry’s competitiveness. Hyundai Merchant Marine (HMM) would acquire Hanjin Shipping’s core assets such as ships, overseas sales network and key work forces to retain Hanjin Shipping’s competitiveness as much as possible. 4. The government
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Aug 22, 2016

Government Decides to Sell Its 30% Stake in Woori Bank to Multiple Buyers

The Public Fund Oversight Committee (PFOC) decided to sell the government’s 30% stake in Woori Bank to multiple buyers with an aim to close the deal by the end of this year. Since the PFOC announced its two-track approach in July 2015 , the government has been tapping demand for the both options. We found that it would be difficult to proceed with the plan of selling a controlling stake to a single buyer under the current market situation, while there is considerable potential demand for acquiring a smaller stake. As a result, the PFOC came to a conclusion that selling the government’s stake to multiple buyers in a smaller stake of 4 to 8% each is the best option to sell Woori Bank in a swift manner, while maximizing the recovery of public funds and contributing to further development of the financial industry. 1. (Shares for sale) 30% out of 48.09% owned by the Korea Deposit Insurance Corporation (KDIC) will be put up for sale2. (Minimum and maximum bidding volume) Minimum bidding volume is 4%, including the percentage of the shares bought in previously. The bidding volume cannot exceed 8%, excluding the previously-bought shares. However, under the Banking Act, non-financial companies must acquire FSC approval in order to buy a stake more than 4% and are not permitted to acquire a bank’s stake exceeding 10%.3. (Competitive auction) The bidding will proceed in competitive auction scheme. In principle, the shares will be sold to the highest bidders, however, the PFOC will take into account factors other than bidding price considering the winning shareholders’ potential influence on Woori Bank’s management. Further details of non-price factors will be decided by the PFOC.4. (Incentives for final bidders) A winning bidder who newly acquired more than 4% will be granted right to recommend one outside director. The PFOC will devise differentiated incentives for bidders depending on their bidding volume in order to encourage bidders to bid for a larger amount of
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Jun 15, 2016

FSC Statement on Results of MSCI 2016 Market Classification Review

FSC Vice Chairman Jeong Eun-bo held a meeting on June 15 with officials from relevant agencies to discuss the government’s responses, following MSCI’s announcement of 2016 Market Classification Review. In its annual market review, MSCI announced that “Korea will not be included on the list for a potential reclassification to Developed status as part of the 2017 Review”, citing the following reasons: “the recent changes announced by the Financial Services Commission in South Korea will not take effect until 2017 and the investment frictions related to the lack of convertibility of the Korean Won and restrictions imposed by the local stock exchange on the use of exchange data for the creation of financial products remain unaddressed.” The Korean government’s stance on the MSCI requirementsThere exist some gaps between the extent of improvements that the government could make under our economic and market circumstances and the level of MSCI’s requirements, making it difficult for Korea to be included in the MSCI’s developed market index in the near future. Convertibility of the Korean Won MSCI has been asking the Korean government to allow offshore trading of the Korean won to address the lack of convertibility of the Korean won. However, we consider that currency market stability is an issue of critical importance to Korea, a small and open economy which highly relies on international trade. The Korean government seeks the internationalization of the Korean won but will move gradually, taking possible impact of currency market volatility on the Korean economy into consideration. In particular, allowing offshore trading of the Korean won is an issue that we cannot address in the short term since it would involve fundamental changes to our current forex management system. Use of KRX price data MSCI demanded that KRX should abolish immediately the “anti-competitive” clauses that require a separate contract for the use of KRX data for the purpose of
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May 24, 2016

Test Operation of Omnibus Account

The FSC/FSS and relevant agencies will launch a test operation of ‘omnibus account’ starting from May 25 with four standing proxies, two securities firms and one global financial investment company. The test run is (i) to have foreign investors engage in devising detailed procedures; and (ii) to prevent technical errors in electronic and settlement system in advance of a full operation of the omnibus account system in 2017. The test operation will be proceeding in two stages: ▪ [stage 1] Mock Trading (May 25~Sept. 2016) Participants will process a whole procedure of order, settlement and ex-post reporting through a mock trading system to check detailed operation process and stability of electronic system. ▪ [stage 2] Real Trading (Sept. 2016~before an official operation scheduled in 2017) A limited number of participants including global investors who participated in mock trading will conduct real trading through an ‘omnibus account.’ The FSC/FSS will gather their suggestions in the process of the stage 2 and amend the system until the full operation in 2017. The FSC/FSS will reflect suggestions gathered from global investors in the process of the test operation into detailed procedures of the omnibus account system; and help more global investors participate in each stage of the test run. FREQUENTLY ASKED QUESTIONS ABOUT OMNIBUS ACCOUNT Test Operation of Omnibus Account1. Why are you conducting the test run through mock trading, not real trading? - Given the nature of an ‘omnibus account’ which enables a consolidated processing of trading orders and settlements from multiple investors, detailed settlement procedures may differ according to each financial institution. If the omnibus account were testes in real trading from the beginning, it might incur losses to investors accruing from settlement errors. - The test operation will be conducted through mock trading based on various scenarios to minimize any possibility of settlement errors. We are plan
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May 20, 2016

FSC Statement on HMM Negotiations

HMM and KDB are doing their best efforts to successfully conclude their negotiations with shipowners on charter rates. What matters is successful conclusion of the negotiations; therefore, the negotiations will be proceeding without being bound to a specific timeline. However, if the negotiations dragged on for so long, it would delay restructuring process of HMM. Therefore, we hope the negotiations will be concluded as soon as possible. In regard with prospect of the negotiation, the FSC is neither optimistic nor pessimistic. We are well aware that the negotiations are a complex and tough process; and that those involved are doing their best to reach a mutually desirable conclusion. If the negotiations failed, we regard that it would be practically difficult for HMM to get back on track. In this context, the negotiations now underway are very significant. If failed despite such efforts, there would be few options left for creditors to choose. The normalization of a business requires sharing of burdens among stakeholders. Adjusting charter rates to appropriate levels is essential for normalization of shipping companies; therefore, we look forward to consideration and cooperation from shipowners. * Please refer to the attached file for details.
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Mar 14, 2016

Introduction of Korea's Individual Savings Accounts (ISAs)

Korea’s Individual Savings Accounts (ISAs) were introduced on March 14, 2016, in which individuals can invest into various financial products such as savings, funds and derivative-linked securities. Previously, individuals had to open separate accounts for each financial product. The introduction of ISAs is expected to help individuals build an investment portfolio tailored to their risk appetite and investment purpose and manage their wealth more efficiently with the aid of asset management experts. ISA products are now on sale starting from March 14 through branches of 33 financial institutions – banks, securities firms and insurers. TYPES OF ISASThere are two types of ISAs: a trust-type product and a discretionary investment product. ▪ Trust-type ISAs The trust-type ISA is aimed at individuals who want to choose financial products to be included into their accounts on their own. Without the account holder’s direction, financial institutions cannot change the composition of investment portfolio. ▪ Discretionary ISAs The discretionary ISA is targeted for those who want to let asset managers manage their money. Financial institutions provide clients with model portfolios, considering their risk appetite and investment purpose. The client is then supposed to pick one of the model portfolios to let asset managers on behalf of them choose products to be included in the account. Without the account holder’s direction, financial institutions are allowed to rebalance assets within the account every quarter, evaluating profitability and safety of such assets. ※ Since only one ISA is allowed per person, individuals have to choose either a trust-type ISA or a discretionary ISA, considering which type of the ISAs is more suitable for themselves. WHAT PRODUCTS CAN BE INCLUDED IN ISAS▪ Savings products – savings and installment savings with banks and mutual savings banks; deposits with mutual financial institutions; and RPs▪ Investment products – public of
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Feb 01, 2016

'Omnibus Account' for Foreign Investors to be Introduced

The FSC announced its plan to introduce an ‘omnibus account’ in an effort to make it easier for foreign investors to trade locally-listed stocks in the Korean stock market. The newly-introduced ‘omnibus account’ system is expected to reduce transaction costs of global asset management companies and make foreign investors’ trading of locally-listed stocks through global securities firms more convenient. BACKGROUNDThere is a growing need for the current foreign investor registration system to improve in accordance with changes in investment environment and practice: - As Korean capital markets become mature, index-tracking passive funds are taking an increasing share of the Korean stock market. Such passive funds are sensitive to transaction costs as they frequently trade in many countries. - Global securities companies are increasingly using omnibus accounts to process multiple trading orders. - The current foreign investor registration system needs to become less rigid as foreign investment limits in Korean companies were abolished except for some public purpose companies(PPC). Against the backdrop, the FSC held meetings with various market participants to gather their opinions and came up with measures to make the foreign investor registration system more reasonable and flexible in accordance with global practice. The system will be improved based on the following three principles: - enabling convenient trading of foreign investors in the Korean stock market in accordance with global investment practice, - ensuring conformity with other relevant domestic rules such as Korean tax regime, and- maintaining monitoring of foreign capital in Korea’s FX and stock markets, which is one of the core functions of foreign investor registration system. CURRENT FOREIGN INVESTOR REGISTRATION SYSTEM1. OverviewForeign investors must register their personal information with the FSS before they can invest in locally-listed stocks. Upon registration, foreign investors are
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