Press Releases - Financial Services Commission

Press Releases

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Jan 10, 2024

Household Loans, December 2023

The outstanding balance of household loans across all financial sectors went up KRW0.2 trillion in December 2023 (preliminary), showing a significant slowdown in the pace of growth from a month ago (up KRW2.6 trillion). In 2023, household loans increased KRW10.1 trillion across all financial sectors, up 0.6 percent from the end of last year. * Monthly change (in trillion KRW, y-o-y): +5.2 (Jul 2023), +6.1 (Aug), +2.4 (Sep), +6.2 (Oct), +2.6 (Nov), +0.2 (DecP) Annual change (in trillion KRW, y-o-y): +56.2 (2019), +112.3 (2020), +107.5 (2021), -8.8 (2022), +10.1 (2023P) (By Type) In December 2023, mortgage loans rose KRW5.1 trillion, slowing down from a rise of KRW5.6 trillion in the previous month. Other types of loans dropped KRW4.9 trillion, showing an accelerated pace of decline from a month ago (down KRW3.0 trillion). (By Sector) Household loans grew at a slower rate in the banking sector (up KRW5.4 trillion up KRW3.2 trillion), while declining at a faster rate in the nonbanking sector (down KRW2.8 trillion down KRW3.0 trillion). Mortgage loans from banks grew at a slightly slower rate from the previous month (up KRW5.7 trillion up KRW5.2 trillion) due to a suspension in the provision of a certain type of policy mortgage loan. Other types of loans fell KRW2.0 trillion due to the effects of year-end bonuses. Household loans from nonbanks fell KRW3.0 trillion in December 2023. Mutual finance businesses (down KRW1.6 trillion), savings banks (down KRW0.9 trillion), specialized credit finance businesses (down KRW0.5 trillion) and insurance companies (down KRW0.01 trillion) all saw declines in household loans. (Assessment) Household loans turned upward in 2023 from a drop in the previous year due to a recovery in the real estate market. Mostly, the growth was caused by policy mortgage loans extended to non-speculative homebuyers. Compared to previous years, the authorities evaluate that the pace of growth (up KRW10.1 trillion) is kept at a stable level currently. Nonet
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Jan 08, 2024

Online One-stop Loan Transfer Service Available for Home Mortgage Loans from January 9

The Financial Services Commission announced that the online one-stop loan transfer service set up in May last year to help borrowers get lower interest rates on credit loans will start to be available for home-backed mortgage loans and jeonse loans from January 9 and January 31, respectively. Borrowers will be able to use this service for mortgage loans secured with an apartment worth KRW1 billion or less and for guaranteed jeonse loans. From January 9, borrowers will be able to check eligibility and make a switch from seven online loan comparison platforms and the mobile apps of thirty-four individual financial companies. In the future, more financial institutions are expected to join the system. To ensure protection for financial consumers, the authorities have required a verification of algorithms for loan comparison platform service providers. The authorities also plan to require loan comparison platform service providers to disclose their commission rates to ensure that consumers are not burdened with extra fees. To make sure that the availability of loan transfer service for housing loans will not push up the size of household debt, the authorities have put in place certain restrictions. For instance, borrowers cannot switch to get more in total loan amounts and that the maximum amount available for the switched loan should be up to the remaining balance of loan. The maturity can be set equally as the initial loan period but cannot be extended to a longer period. To prevent abrupt money moves from taking place between financial institutions, the authorities will require them to establish maximum levels of handling housing loan transfers processed through this system, while closely monitoring the system usage in close coordination with the Korea Financial Telecommunications Clearings Institute and financial industry associations. * Please refer to the attached PDF for details.
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Jan 05, 2024

Authorities Plan to Introduce a Total Platform for Microfinance Assistance Available from June 2024

Chairman Kim Joo-hyun of the Financial Services Commission visited an inclusive finance support center operated by Korea Inclusive Finance Agency in Seoul on January 5 and held talks on the governments plan for microfinance support for this year with officials from relevant organizations participating. In his opening, Chairman Kim first talked about some of the efforts made by the government to boost assistance for vulnerable groups in the previous year. The size of policy funds supplied for microfinance assistance last year was the largest ever, amounting to some KRW10.7 trillion. Moreover, a total of KRW95.85 billion in small-sum living expense lending assistance was provided to those who lacked any income sources or fell behind debt payments. Along this line, authorities updated various assistance programs to strengthen financial inclusion and made available a comprehensive consulting and counseling program linking supports for employment, social welfare, debt restructuring and so on. For this years microfinance policy plan, Chairman Kim said that the government will focus on boosting convenience for end-users and assisting those in need to regain footing on their own. To this end, the government plans to launch an online total platform for microfinance assistance for operation from the first half of this year. The platform will help to guide users to find the most suitable microfinance products according to each users personal needs and situation and offer one-stop application service as well as the consulting and counseling support program. Developing this platform will mark the first step towards making the provision of microfinance assistance more efficient and user-oriented, since it will provide more personalized and comprehensive search results for comparison, while allowing users to search, compare, choose and apply all from a single platform. In order to tackle challenges facing vulnerable groups, Chairman Kim said that it is important to ensure the avai
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Jan 03, 2024

FSC Plans to Work on Measures to Improve the Competitiveness of Publicly Offered Funds

Vice Chairman Kim Soyoung of the Financial Services Commission presided over a meeting with officials from related authorities and an industry groupto discuss plans to improve the competitiveness of the publicly offered funds market on January 3. In his opening remarks, Vice Chairman Kim said that the government has never been more serious about making fundamental changes to our capital markets, and that this plan is also a part of the policy drive intended to resolve the issue of Korea discount, the persistent undervaluation of Korean companies in stock markets. In this regard, the proposed plan will focus on nine specific ways to bring about improvements regarding institutions, products and infrastructure, with aims to cut transaction costs, strengthen product marketability and boost transaction convenience. First, the proposed plan intends to bring about improvements from institutions by strengthening the credibility and accountability of fund managers, sellers and related businesses including the fund accounting and administration companies and various ratings companies. Currently, the sales remuneration structure for fund sellers is designed in a way that all fund sellers are paid with fund assets in a uniform way. To boost accountability and competition between fund sellers, the authorities will introduce a more reasonable seller remuneration system (fund class) under which fund sellers will be paid directly from investors with the possibility of having different fee rates for different sellers within the statutory limit of one percent. For these types (or classes) of funds, the seller fee remuneration system can be linked to the performance of funds to boost responsibility of fund sellers. Along this line, the proposed plan will bolster asset managers accountability by requiring them to more regularly conduct evaluations on alternative investment assets and to more accurately advertise fees for exchange-traded funds (ETFs). With increases in demand for more f
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Dec 28, 2023

Authorities Hold Meeting to Discuss Corporate Debt Workout of Taeyoung Engineering and Construction

The Financial Services Commission held a meeting with the related authorities and financial institution on December 28 to discuss measures to help business normalization of Taeyoung Engineering Construction and minimize the impact as the company filed for a debt workout under the Corporate Restructuring Promotion Act today. Since the turmoil in the real estate project financing (PF) market last year, the government has been closely monitoring market developments and financial conditions of major construction companies. Taeyoung EC has been faced with financial difficulties as it was struggling with refinancing its real estate PF loans and asset-backed securities amid global tightening of monetary policies. In particular, unlike other construction companies, it was found that Taeyoung EC had a high proportion of self-performed projects as well as high levels of debt-to-equity ratio and PF loan guarantees. These factors show particular characteristics of Taeyoung EC, which remain different from other companies situations. In this regard, the authorities at the meeting agreed that there is no possibility of a systemic risk across the construction sector or financial market as long as there is no spread of anxiety. Taeyoung EC has already demonstrated self-rescue efforts by coming up with KRW1 trillion on its own and submitted further plans to sell its subsidiaries and other assets. The company is currently working on its debt workout plan with Korea Development Bank, its main creditor bank, which will work on business normalization of Taeyoung EC based on the companys strong commitment to self-rescue efforts. As of the end of September 2023, there were sixty real estate PF development sites under management of Taeyoung EC. Based on the type and the progress of each project, various arrangements and solutions will be employed to either continue to carry out projects or seek restructuring or sale. At the meeting, Chairman Kim Joo-hyun of the Financial Services Commission
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Dec 28, 2023

Application Period for Personal Debt Purchase Program Extended for One Year Until the End of 2024

The Financial Services Commission announced that the period for operating the personal debt purchase program intended to protect vulnerable debtors will be extended for one more year until the end of 2024. The personal debt purchase program was first launched in June 2020 in the wake of the coronavirus pandemic with aims to help to avert individual debtors from facing the risk of excessive debt collection practices and to help them regain their footing. As of December 29, 2023, the program has provided assistance in 112,377 cases, which amounts to some KRW737.8 billion in non-collateralized delinquent personal debt. After considering the necessity of extending the availability of support for vulnerable borrowers amid increases in interest rates, the FSC along with the Korea Asset Management Corporation (KAMCO) and all financial industry associations decided to extend the program operation for one more year until the end of 2024. The authorities will continue to work with the financial sectors to help reduce the burden of vulnerable debtors and seek measures to facilitate their recovery and resumption back to normal economic activities. * Please refer to the attached PDF for details.
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Dec 27, 2023

Stressed Debt Service Ratio Rules to Take Effect in 2024

The Financial Services Commission announced that the stressed debt service ratio (DSR) rules will take effect in 2024 on all types of loans that have variable, mixed or periodically changing interest rate structures. The stressed DSR system imposes a certain level of additional stress rate when calculating the borrowers DSR as it takes into account the possibility of the borrower facing heavier repayment burdens in the future with increases in interest rates. The additional stress rate will be determined based on the comparison of interest rates between the five-year peak level and the present level (as of May and November of every year). However, to buffer against the possibility of overestimating or underestimating the risk associated with interest rate changes in times or both high and low interest rates, the additional stress rate will be decided between a minimum of 1.5 percent and a maximum of 3.0 percent. For loans with variable interest rates, an additional stress rate of the five-year peak rate minus the present rate will be applied. For loans with mixed interest rate structuresthose with a fixed interest rate for a certain period of time first and changed into a variable interest rate structure thereafterthe longer the period of fixed interest rate structure, the lower the level of additional stress rates. For instance, for 30-year loans, if the period of fixed interest rate is set between five to nine years, the additional stress rate will be applied at a 60 percent level. For the fixed rate terms of nine to fifteen years and fifteen to twenty-one years, the additional stress rate will be applied at a 40 percent level and a 20 percent level, respectively. For loans with periodically changing interest rate structures, additional stress rates will be applied at eased levels. For 30-year loans, if the period of interest rate change is five to nine years, the additional stress rate will be applied at a 30 percent level. For those with nine-to-fifteen-years an
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Dec 26, 2023

SFC Imposes Penalty Surcharges on Global Investment Banks for Illegal Short Selling Activities

The Securities and Futures Commission, a sub-commission within the Financial Services Commission responsible for the oversight of the securities and futures markets, decided to impose KRW26.52 billion in penalty surcharges on two global investment banks (Company A and Company B) and an affiliated domestic securities firm (Company C) for violating short selling regulations under the Financial Investment Services and Capital Markets Act (FSCMA). The SFC also decided to report violations committed by Company A and Company B to the prosecutors office for investigation. The authorities found that the naked short selling activities committed by these financial companies over an extended period (about four-to-nine-months) constitute a grave offense harming capital markets trading order and investor confidence. Thus, the SFC reached a decision to bring the severest level of penalty surcharges against them since the penalty surcharge system for short selling violations became available in April 2021. Company A based in Hong Kong was found to have placed short sale orders amounting to about KRW40 billion on 101 stock items between September 2021 and May 2022 without first borrowing the shares. The SFC found the naked short sale orders placed by Company A to be intentional. An affiliated domestic securities firm (Company C) of Company A also violated short selling regulations by continuously handling consigned orders. Company B based in Hong King was found to have placed short sale orders of about KRW16 billion on nine stock items between August 2021and December 2021. Although the company was well aware that its ordering process and computer system were not consistent with domestic regulations, Company B continuously and repeatedly placed short sale orders first and then borrowed shares afterwards for a prolonged period of time. The authorities found these breach of rules to be intentional. The financial authorities will continue to strictly deal with unfair trading activities
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Dec 22, 2023

Authorities Plan to Set Up Taskforce to Effectively and Flexibly Respond to ELS Market Anxiety

The Financial Services Commission and the Financial Supervisory Service held a meeting on December 22 to check current situation regarding the sales of Hong Kong index-linked equity-linked securities (ELS) by domestic financial institutions. They have recently been a source of anxiety for investors following sharp declines in Hong Kongs Hang Seng China Enterprises Index (HSCEI). At the meeting, the authorities reviewed the status of sales of ELS products linked to HSCEI and ways to effectively handle potential loss to investors. As of November 2023, the total volume of Hong Kong index-linked ELS products sold to investors amounted to KRW19.3 trillion. Among them, about 82.1 percent or KRW15.9 trillion were sold by banks. Most of the ELS products considered to be problematic are the ones issued after early 2021 when the HSCEI was at its peak. These ELS products are set to mature in early 2024 with the potential of inflicting loss to investors. To prepare for this possibility of investor loss, the financial authorities have instructed the sellers of these Hong Kong index-linked ELS products to come up with response strategies. In addition, from the end of November 2023, the FSS has been conducting inspections on the twelve major banks and securities firms to closely scrutinize their marketing process, sales incentives and so on. Moreover, to be able to effectively and flexibly deal with various situations arising from potential investor losses, the authorities will set up and operate a taskforce run by the FSS to handle consumer complaints and mediation of conflicts and to carry out inspections and take needed actions on the sellers. At the meeting, FSC Secretary General Lee Se-Hoon said that the authorities will closely communicate with the market to ensure the availability of relevant information needed in the market, so that there is no increase in market anxiety concerning the Hong Kong index-linked ELS products. Secretary General Lee also added that based on the
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Dec 20, 2023

Accounts Receivable Factoring Service from KODIT to be Available for Middle Market Enterprises

The Financial Services Commission announced that a revision bill of the Korea Credit Guarantee Fund Act was passed by the National Assembly during a plenary session held on December 20. Under the revised law, middle market enterprises (as designated by the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-standing Enterprises) will be able to receive financing support through Korea Credit Guarantee Fund (KODIT)s accounts receivable factoring service. KODITs accounts receivable factoring (or invoice financing) service first became available in February 2021 for small- and medium-sized enterprises, and it helped to improve cash flows of SMEs without adding an extra burden on their debt ratios. With the revised law, middle market enterprises will also be able to have access to KODITs accounts receivable factoring service from 2024. However, during the early stage, the scope of middle market enterprises eligible for this service will be limited to those with annual revenue of less than KRW300 billion, which will be further specified under a revision of the enforcement decree. This threshold level may be raised in the future depending on the economic condition and support capacity. For 2024, the government plans to make available a total of KRW150 billion in accounts receivable factoring service, an increase of KRW60 billion from this year. Even with the inclusion of middle market enterprises in 2024, KODIT plans to supply at least KRW90 billion to SMEs to ensure the availability of steady support for them. * Please refer to the attached PDF for details.
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Dec 20, 2023

New Legislative Bill on Personal Credit Management and Debtor Protection Passed by National Assembly

The Financial Services Commission announced that a new bill on personal credit management and individual debtor protection was passed by the National Assembly during a plenary session held on December 20. The new legislation establishes a legal ground for individual financial institutions to provide debt restructuring on their own to individual debtors, alongside the public sector-driven debt restructuring process currently made available through the Credit Counseling and Recovery Service (CCRS) and the court system. This legislation, therefore, helps to promote individual lending institutions in the private sector to offer debt restructuring or settlement to debtors. The new law aims to protect the rights and interests of debtors and helps to minimize social costs by assisting debtors to regain their footing and preventing larger defaults. Under the new legislation, first, individual debtors who borrowed less than KRW30 million in loans and accrued overdue payments will be able to directly request for debt restructuring or settlement from their creditor financial institutions. Once requested, the creditor financial institution should halt debt collection and notify its decision about the availability of debt restructuring to the debtor within ten business days. Second, the new law will upgrade the ways in which interest payments are calculated on overdue loans to help to ease the burden and psychological pressure placed on debtors who have borrowed less than KRW50 million in loans. Third, the new law restricts excessive debt collection practices to ensure that debtors are able to continue to live free from fears of debt collection. The total number of debt collection attempts will be limited to seven times over seven days. Individuals can make a request not to be contacted at certain hours or via certain contact methods. The new law on personal credit management and debtor protection is expected to take effect nine months after promulgation (possibly in October 202
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Dec 20, 2023

Financial Authorities of Korea and Japan Hold 7th Shuttle Meeting in Seoul on December 19-20

The Financial Services Commission and the Financial Supervisory Service held the 7th shuttle meeting with Japans Financial Services Agency in Seoul on December 19-20. The shuttle meeting between the financial authorities of the two countries was held for the first time in seven years since the last meeting held in Tokyo in June 2016. Key details of the meeting are included in the joint press release shown below. 1. The Seventh Korea-Japan Shuttle Meeting was held by three financial supervisory and regulatory authorities (the Financial Services Commission (FSC), the Financial Supervisory Service (FSS) of the Republic of Korea and the Financial Services Agency (FSA) of Japan; hereinafter referred to as the three authorities) in Seoul, the Republic of Korea, on December 19 and 20. The Shuttle Meeting was held for the first time in seven years since the last meeting in Tokyo in June 2016. 2. The first Shuttle Meeting was held in Seoul in 2012 with the aim of strengthening cooperation between Korean and Japanese financial authorities. At the Shuttle Meeting this year, a meeting between Mr. KIM Joo-hyun, Chairman of the FSC of the Republic of Korea, and Mr. KURITA Teruhisa, Commissioner of the FSA of Japan, was held on December 19, and a meeting between Mr. LEE Bokhyun, Governor of the FSS of the Republic of Korea, and Mr. KURITA was held on December 20. 3. At the Shuttle Meeting, the three authorities held a frank and constructive discussion on the global economic and financial situation as well as their financial supervisory and regulatory priorities. 4. Mr. Kim welcomed todays shuttle meeting, which took place following the October meeting with Mr. Kurita in Tokyo. Recognizing the Japanese governments policy to promote digital transformation and startup business, as well as a move that encourages Korean startups and fintech companies to closely watch the Japanese market, Mr. Kim indicated that the FSC, in tandem with its relevant institutions, plans to hold IR events,
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Dec 19, 2023

Provision of Policy Finance Support Worth KRW212 Trillion Planned for 2024

The Financial Services Commission held a meeting with the related government ministries and policy financial institutions on December 19 and decided on a plan for providing policy finance support for 2024. The consultative body on policy finance support was launched last year with aims to more effectively supply policy funds in line with the industrial strategies and policies prioritized by government ministries.Through the operation of the consultative body, the government was able to successfully implement and quickly provide KRW91 trillion in policy funding support to the five key strategic sectors in 2023 as planned. In 2024, the authorities decided to increase the total amount of financing support made available through policy financial institutions to KRW212 trillion (up 3.4 percent from 2023). For policy funds earmarked for the five major strategic sectorsfor nurturing super gap growth for domestic industries, supporting business reorganization and industrial restructuring, promoting domestic startups and venture businesses to grow into global unicorns and so onthe authorities decided to supply 11.5 percent more than the amount provided this year, or KRW102 trillion-plus. More specifically, for the global super gap sectors, which include the semiconductor, secondary battery and display industries, a total of KRW17.6 trillion in policy finance support will be provided in 2024, up 12.8 percent from the previous year. For cultivating domestic startups and venture businesses into global unicorns, a total of KRW12.6 trillion in policy finance support will be supplied, up 39.5 percent from 2023. To help businesses better cope with the continuation of high interest rates, high inflation and high USD-to-KRW exchange rates, a total of KRW28.7 trillion in policy finance support will be provided in 2024, an increase of 8.9 percent from this year. At the meeting, FSC Vice Chairman Kim Soyoung said that the provision of policy finance support in 2024 will be implemented w
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Dec 18, 2023

Provision of Corporate Disclosures in English from 2024 to Enhance Information Access for Foreign Investors

The Financial Services Commission announced that from January 1, 2024, large KOSPI-listed companies will begin to provide English disclosures on material information within three business days from filing disclosures in Korean with the KRX. This is the first phase of the mandatory English disclosure requirement being implemented as part of the comprehensive measures to improve foreign investors access to Korean capital markets announced in January this year. According to this plan, English disclosures on material information will become mandatory for KOSPI-listed companies in two phases (1st phase from 2024 to 2025 and 2nd phase expected from after 2026) starting with large listed firms. A variety of support programs to promote an expansion of English disclosures will also be made available. From 2024, KOSPI-listed companies with assets worth KRW10 trillion or more will be required to submit English disclosures on (a) matters related to closing financial statement, (b) matters concerning important decision-making and (c) matters pertaining to suspension of trading within three days from filing their regulatory disclosures in Korean. In the meantime, the authorities plan to continue to implement various support measures to facilitate businesses to more easily adjust to the mandatory English disclosure requirement. In this regard, special benefits, such as an exemption of listing fee, will be granted to those selected for outstanding English disclosures, and the availability of translation service offered by professional translation service providers will be expanded, while the authorities strengthen training courses on English disclosures. In addition, the authorities plan to work on making improvements to English disclosure platforms (KRXs KIND English website and FSSs DART English website) by expanding the automated machine translation service, providing English search function for Korean statutory disclosures, and enhancing translation quality using AI-based machi
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Dec 14, 2023

FSC Provides Guideline on Underlying Assets for Fractional Investment Service Providers

The Financial Services Commission introduced a guideline on the underlying asset requirement of trust beneficiary certificates when a designated innovative financial service provider under the financial regulatory sandbox program intends to provide fractional investment service through issuance of trust beneficiary certificates. The guideline has been prepared after having discussions with the innovative financial service selection committee (Nov. 28) and at FSCs regular meeting (Dec. 13). In principle, fractional investment service providers need to first consider making use of the traditionally available investment vehicles. However, when it is deemed to be not viable, by applying the principle of supplementarity, a regulatory exemption may be granted under the Special Act on Support for Financial Innovation to allow the issuance of trust beneficiary certificates as prescribed by the Financial Investment Services and Capital Markets Act (FSCMA). Those applying to assume fractional investment business under the regulatory sandbox program should first look into ways to do so by making use of the traditionally existing means of investment vehicles permitted under current laws. Moreover, they should consider that there needs to be a sufficient level of contribution to innovation and investor convenience in issuing trust beneficiary certificates. In this regard, the supplementarity principle will be applied in a flexible manner to allow testing of innovative financial services, if the applying entity has given adequate consideration about the supplementarity principle, and that if there is not much usage of traditional investment vehicles in the fractional investment market. The trust beneficiary certificates underlying asset requirements include the following. First, an objective valuation and assessment should be available. The issuer of trust beneficiary certificates should determine the issuing price and quantity after assessing the value of trust assets, and the i
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Dec 13, 2023

Household Loans, November 2023

The outstanding balance of household loans across all financial sectors increased KRW2.6 trillion in November 2023 (preliminary), showing a significant decline from the level of growth in the previous month (up KRW6.2 trillion). * Change (%, y-o-y): +2.6 (May 2023), +3.2 (Jun), +5.2 (Jul), +6.1 (Aug), +2.4 (Sep), +6.2 (Oct), +2.6 (Nov) (By Type) Home-backed mortgage loans rose KRW5.6 trillion, edging up slightly more than the previous month (up KRW5.2 trillion). Mortgage loans rose KRW5.7 trillion in the banking sector but fell KRW0.1 trillion in the nonbanking sector. Other types of loans dropped KRW3.0 trillion led by non-housing mortgage loans and savings secured loans in the mutual finance sector. (By Sector) Household loans grew at a slower rate in the banking sector and fell at a faster rate in the nonbanking sector compared to the previous month. Banks saw an increase of KRW5.4 trillion in household loans in November, which shows a slowdown from the June-September period (up KRW6.0 trillion to up KRW7.0 trillion), led mostly by policy mortgage loans and group lending for non-speculative homebuyers. Other types of loans fell KRW0.3 trillion, edging down from an increase of KRW1.0 trillion a month ago. Nonbanks saw a drop of KRW2.8 trillion in household loans, falling at a faster rate compared to the previous month (down KRW0.5 trillion), led by mutual finance unions (down KRW2.8 trillion), savings banks (down KRW0.1 trillion) and specialized credit finance businesses (down KRW0.01 trillion). Insurance companies saw a rise of KRW0.1 trillion in household loans. The declining pace of growth in household loans in November was caused by a slowdown in mortgage lending in the banking sector. However, the authorities will continue to closely monitor trends of household loans and ensure effective implementation of the household loan management measures, through introduction of a stressed debt service ratio (DSR) limit and so on. * Please refer to the attached file for
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Dec 13, 2023

Investing in Domestic Capital Markets Made Easier for Foreign Investors

The Financial Services Commission announced that a set of measures intended to enhance foreign investors access to domestic capital markets will take effect from December 14, 2023. The measures include the abolishment of foreign investors prior registration requirement, the easing of reporting duty for foreign securities firms in their use of omnibus account, and the expanded scope of foreign investors OTC transactions eligible for ex post reporting. Meanwhile, the mandatory English disclosure rule for listed companies will phase in from January 1, 2024. First, the foreign investor registration system, which mandated foreign investors to register with the Financial Supervisory Service (FSS) prior to making investment in domestic stock markets, will be abolished. As the revised Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) takes effect from tomorrow (December 14), foreign investors are able to open investment accounts in domestic capital markets either with a legal entity identifier (LEI, for corporate investors) or a passport number (for individual investors) without going through a prior registration process. Those that have already been assigned a foreign investor registration number can still use their identifier so as to help to minimize causing unnecessary inconvenience. Second, the use of omnibus account for foreign securities firms will be made more convenient. Although the omnibus account system has been available since 2017, it has never been utilized by foreign securities firms due to the heavy burden of reporting rule, which required them to instantly report each end-investors completed transactions at the moment of settlement (T+2). Starting from tomorrow, their reporting cycle will be eased to once every month. Under the revised rules on financial investment businesses, foreign securities firms will be required to reportas of the last day of every montheach end-investors transaction details to an omnibus account
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Dec 11, 2023

FSC Proposes Rules on the Protection of Virtual Asset Users

The Financial Services Commission (FSC) proposed detailed rules under the Act on the Protection of Virtual Asset Users (the Act hereinafter), which is scheduled to take effect on July 19, 2024. Aimed at protecting virtual asset users and establishing a sound order in virtual asset transactions, the Act defines the scope of virtual assets subject to the law and requires virtual asset service providers (VASPs) to safely manage and store their customers deposits and virtual assets. It also provides statutory grounds for sanctions including criminal penalty and fines to punish unfair trading activities using virtual assets. The proposal is intended to specify details that the Act delegates to its subordinate enforcement decree and supervisory regulation. First, the proposal specifies more types of tokens not covered by the Act. Under the Act, virtual assets are defined as electronic tokens with economic value which can be traded or transferred electronically. The Act excludes game money, electronic money, electronic stocks, electronic bills, electronic B/L and central bank digital currency (CBDC) from the coverage of the law. The proposal adds electronic bonds, mobile gift certificates, deposit tokens linked to CBDC, and non-fungible tokens (NFTs)to the list of excluded tokens. Second, the proposal prescribes what kind of financial institutions should be a custodian for VASP customers money and how customers funds should be managed. The Act requires VASPs to keep customers money separate from their own funds and deposit or trust them to a credible financial institution. Taking account of credibility, stability and current systems of operating deposit, the Enforcement Decree chose banks as a custodian institution for VASP customers money. Custodian banks are allowed to invest VASP customers deposit or trusted funds, kept separately from VASPs own funds, only in safe assets such as government bonds. VASPs are required to pay fees to their customers for using their deposit
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Dec 08, 2023

Financial Company Executives to be Subject to Enhanced Internal Control Management Responsibilities

The Financial Services Commission announced that a revision bill of the Act on Corporate Governance of Financial Companies was passed by the National Assembly on December 8. The revision requires financial companies to assign a responsibilities map for each executive officer in his or her line of work and revamps the ways in which executive members internal control management duties are examined. Under the current legal framework, which came into force in 2016, financial companies are required to establish their own internal control standards, but this has often been treated as a perfunctory and procedural matter, without the effect of bringing about real change from the employees or management. In this regard, the revised law aims to resolve this problem by clearly designating internal control responsibilities of executive members to ensure that all financial company executives treat internal control matters as their own responsibilities. First, the revision introduces a responsibilities map for all executive officers. This is not a uniform regulatory requirement imposed by the financial authorities. By having financial companies to set up and operate an internal control system on their own according to their own needs and circumstances and by having the responsibility of each executive officer clearly assigned, this measure aims to raise awareness and responsibility of executive officers about their internal control system. More specifically, CEOs of financial companies will need to prepare a responsibilities map showing how internal control responsibilities are shared and divided among their company executives, without having any redundancy or a vacuum, for confirmation by the board and submission to the authorities. In this regard, financial companies will also be required to verify the professional capacity, accountability and trustworthiness of their executive members. Submission of the responsibilities map will begin six months after the law takes effect star
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Dec 08, 2023

Reenactment of Corporate Restructuring Promotion Act to Facilitate Normalization of Distressed Enterprises

The Financial Services Commission announced that the Corporate Restructuring Promotion Act, which makes available prompt debt restructuring support for distressed enterprises, was reenacted by the National Assembly on December 8. The Corporate Restructuring Promotion Act, which provides legal foundation for the corporate workout process, was first enacted in 2001 with a sunset provision and has been renewed or reenacted multiple times thus far. The newly reenacted version of the Act largely maintains the same legal provisions carried under the previous law regarding the corporate credit risk assessment and workout process, but includes additional measures intended to boost the effectiveness of the corporate debt workout support. The new measures include offering the right of priority payment to third party creditors to enhance funding support and granting exemption of liability to the administrators of corporate debt restructuring. The newly enacted law has a three-year sunset provision, and the FSC needs to draw up measures to improve the system regarding the role of the court in corporate restructuring until the end of 2025 as provided by the supplementary opinion given by the National Policy Committee of the Parliament. Since this years corporate credit risk assessment results are scheduled to be announced soon, the authorities expect that the newly reenacted law will help those selected as showing signs of insolvency to take advantage of the debt workout process. At the same time, the FSC will form a taskforce to work on measure for improving the corporate debt restructuring system. The newly reenacted Corporate Restructuring Promotion Act will take effect immediately after the promulgation of the law, which is expected to be in early January 2024. * Please refer to the attached file for details.
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