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Mar 19, 2008
- Domestic Financial Institutions’ Bear Stearns-Related Credit Exposures and Supervisory Authorities’ Assessment
- The Financial Services Commission and the Financial Supervisory Service held a joint meeting on March 18 to take stock of domestic financial institutions' Bear Stearns-related credit exposures and appraise the ongoing financial market developments at home and abroad. The meeting was chaired by FSC Vice Chairman Rhee Chang-Yong and concluded with an action plan to step up market monitoring.Bear Stearns-related exposureDomestic financial institutions' Bear Stearns-related exposure was estimated at KRW443.1 billion (approximately US$434 million). Bank exposures totaled about KRW40.0 billion, which included KRW30 billion in Bear Stearns's debt securities, KRW7 to 10 billion in synthetic CDOs, and KRW400 million in derivatives (futures and options). Securities companies' investment in ELS by Bear Sterns was estimated at KRW211.1 billion. For insurance companies, the total exposure was put at KRW192.0 billion-KRW122.0 billion in debt securities and KRW70.0 billion in securitized assets including CDOs and CLNs.Assessment and responseWith J.P.Morgan Chase's assumption of Bear Stearns' liabilities, losses to be incurred by domestic financial are expected to be immaterial. The affirmation of the credit ratings of J.P. Morgan Chase by Moody's on March 17 following the Bear Stearns takeover is also expected to boost the prospect for minimal losses for domestic financial institutions. In response to the ongoing turmoil in the global credit markets and its likely adverse impact on domestic financial institutions, the FSC and the FSS agreed to form a joint market monitoring task force to keep a close watch on financial market developments and step up monitoring of sector-specific risks. This will include identifying domestic financial institutions' exposure to non-Bear Stearns assets, funding conditions for foreign currencies, unwinding of yen-carry trades, asset-liability maturity mismatch, and roll-over ratios.* Please refer to the attached PDF below.
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Jan 09, 2008
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Nov 16, 2007
- Fund Assets Under Management: October, 2007
- Assets under management (AUM) of funds that invest at home and overseas totaled KRW330.8 trillion as of end-October, up sharply from KRW243 trillion at end-2006 and KRW218.2 trillion at end-2005. With surging stock markets at home and abroad, stock funds saw a KRW85.6 trillion increase in AUM since the beginning of the year.For funds that invest in overseas assets, AUM as of end-October came to KRW97.3 trillion, compared with KRW32.2 trillion at end-2006. The AUM of funds created in Korea accounted for KRW85 trillion of the total, compared with KRW19.3 trillion at end-2006. For offshore funds—those created outside Korea and sold to investors in Korea—the total was KRW12.3 trillion, down modestly from KRW13.5 trillion at end-May this year.Recent trends in fund investment1. The average investment-holding period in a fund jumped from 12.9 months in 2005 to 18.4 months as of end-September this year. The proportion of investor accounts with investment-holding period longer than 18 months came to 49.1% as of end-September and is likely to increase as more investors open installment plan accounts for stock investment. As of end-September, the number of stock installment plan accounts totaled 10.34 million with KRW34.5 trillion in AUM, compared with 6.43 million accounts with KRW21.9 trillion at end-2006 and 4.65 million accounts with KRW9.6 trillion at end-2005.2. The National Pension Service and many employer-sponsored retirement plans are increasingly turning to asset management companies for investment management, a development that bodes well for the future growth of the local asset management service industry. The NPS had KRW32.5 trillion under asset management companies as of end-September, up from KRW19.7 trillion at end-2006. For retirement plans, the figure jumped from KRW72.9 billion to KRW237.3 billion during the first nine months of 2007.3. Fund investment in China continued to pick up the pace in 2007 despite signs of overheated rush in Chinese markets. As
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Oct 23, 2007
- FSC/FSS Announces "Roadmap for Advanced Financial Supervision" Aimed at Taking Korea’s Financial Supervision to the Next Level
- The Financial Supervisory Commission and the Financial Supervisory Service announced the formation of Committee for Advanced Financial Supervision jointly headed by Chairman/Governor Kim Yong-Duk and Vice President Choi Woon-Youl of Sogang University and the release of “Roadmap for Advanced Financial Supervision” following the Committee’s first meeting on October 22. The roadmap is a product of a public-private sector collaboration involving the FSC/FSS and 30 private sector representatives and experts from the academia, research institutes, the financial services industry, and civic organizations.The roadmap was initiated with the acknowledgement that the supervisory system— including the traditional approaches and practices—as well as the supervisory authorities’ organizational structure and human resources management has not satisfactorily kept up with the demands of the rapidly evolving market and is thus in need of change. The announcement of the roadmap, which coincides with the tenth anniversary of the creation of the FSS as a fully integrated financial supervisory authority, also comes amid a growing recognition that next three years may well prove pivotal for Korea’s prospect for emergence as Northeast Asia’s financial hub.Key Objectives under the RoadmapThe roadmap consists of five key policy objectives with 100 tasks (grouped into 12 areas) to be completed within the next three years as well as 30 performance measurement indices. The five key policy objectives outlined in the roadmap are (1) a fundamental shift in financial supervision, (2) responsive supervision, (3) support for business autonomy and innovation of financial institutions, (4) consumer and investor protection, and (5) confidence and trust in financial supervisory authorities.1. A Fundamental Shift in Financial SupervisionA fundamental shift and reorientation of financial supervision will be pursued. Currently, financial supervision takes a highly specific, rule-based approa
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Sep 19, 2007
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Aug 30, 2007
- Mr. William A. Ryback, Former Deputy Chief Executive of Hong Kong Monetary Authority, to Join the Financial Supervisory Service
- The Financial Supervisory Service announced on August 30 the appointment of Mr. William A. Ryback, the former Deputy Chief Executive of Hong Kong Monetary Authority (HKMA), as Special Advisor to the FSS to help improve financial market regulation and foster global standards. The FSS expects Mr. Ryback to play an active role as well in helping the FSS strengthen its supervisory networks and cooperation with foreign regulators and international regulatory organizations.Mr. Ryback has extensive experience and expertise in banking supervision and international financial affairs from his thirty five years of professional career at the U.S. Board of Governors of the Federal Reserve System and the Office of the Comptroller of the Currency. He also served as the Chairman of the Association of Supervisors of Banks of the Americas and a member of the Core Principles Liaison Group of the Basel Committee on Banking Supervision, and has over the years established strong ties and network with financial supervisors worldwide and multilateral organizations. Prior to the FSS appointment, Mr. Ryback worked as the Deputy Chief Executive of HKMA where he oversaw banking supervision and contributed to financial sector growth policies.Among others, the FSS expects Mr. Ryback to reinvigorate the ongoing preparations for the New Basel Accord as well as the FSS drive for deregulation and advanced financial supervision. With his strong ties and network with financial supervisors and international supervisory organizations, Mr. Ryback is also expected to make significant contribution to Korea’s financial hub initiative.Mr. Ryback will assume his duties at the FSS on October 22, 2007. Initially, he will act as Advisor to the Governor in international supervisory affairs such as the New Basel Accord and risk management in the banking sector. He is also expected to carry out special tasks on ongoing supervisory matters under the Governor’s direction. The FSS also announced that it will decid
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May 25, 2007
- Chairman/Governor Yoon Jeung-Hyun to Hold Roundtable Meeting in London and Deliver Keynote Speech at IIF Spring Membership Meeting in Athens
- Chairman/Governor Yoon Jeung-Hyun of Financial Supervisory Commission and Financial Supervisory Service is scheduled to travel to Basel, London, and Athens from May 24 to June 3 to meet with high-level regulators, hold a roundtable meeting with senior executives of global financial firms, and deliver the keynote speech at the Spring Membership Meeting of the Institute of International Finance (IIF).In Basel, Chairman/Governor Yoon is expected to meet with Dr. Yoshihiro Kawai, Secretary General of the International Association of Insurance Supervisors (IAIS), for discussions on issues ranging from Asia’s insurance market development to progress with IAIS Multilateral Memorandum of Understanding initiative. Chairman/Governor Yoon also plans to hold a high-level meeting with BIS General Manager Malcolm Knight and Secretary General Stefan Walters of the Basel Committee for discussions on, among others, progress with Basel II and issues related to cross-border implementation of the new accord.During his stay in London, Chairman/Governor Yoon is expected to sign a Memorandum of Understanding on supervisory cooperation with Chairman Callum McCarthy of U.K. Financial Services Authority and meet with Dr. Chris Gibson-Smith, Chairman of London Stock Exchange, for discussions on global equity markets, exchange consolidation, and London’s success as a global financial center. A roundtable meeting with senior executives of international financial services firms that are active in Korea and throughout Asia is also scheduled in London. Chairman/Governor Yoon plans to stress the success Korea has had with deregulation, reinforcing market discipline, and improving the overall regulatory environment for foreign businesses and investors.In Athens, Greece, Chairman/Governor Yoon will deliver the keynote speech at the IIF Spring Membership Meeting before senior business executives of global financial firms. In his speech, Chairman/Governor Yoon is expected to emphasize the benefits
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May 17, 2007
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Mar 21, 2007
- Signing of Statement of Protocol with U.S. PCAOB
- The Financial Supervisory Commission and the Financial Supervisory Service announced the signing of Statement of Protocol (“Statement”) with the U.S. Public Company Accounting Oversight Board (PCAOB) on March 21. The Statement, signed by Mr. Yoon Jeung-Hyun, Chairman of the FSC and Governor of the FSS, and Mr. Mark Olsen, Chairman of the PCAOB, in Seoul, is intended to facilitate cooperation in matters related to the oversight of the auditors of both countries and thereby contribute to improved accuracy and reliability of audit reports.The Statement consists of four key provisions on cooperation relating to inspection, investigation, sanction, and confidentiality. In respect of cooperation in an inspection, the Statement provides that each regulatory authority may, on behalf of or in support of the other, review audit papers, conduct interviews of an audit firm’s personnel, and assess an audit firm’s quality control system. In determining sanctions for accounting firms that fall within the regulatory jurisdiction of both the FSC/FSS and the PCAOB, the Statement provides that each regulatory authority shall endeavor to take into account the laws and regulations of the other. In respect of confidentiality, the Statement calls on both the FSC/FSS and the PCAOB to hold confidential documents and information created or received in the course of cooperation.For the FSC/FSS, the signing of the Statement is the first ever with a foreign audit oversight authority, and the expectation is that the Statement will contribute to enhanced cooperation on the oversight of accounting firms between the two countries. With regulators elsewhere stepping up oversight of auditors of multinational companies whose securities are traded in their markets, the FSC/FSS will endeavor to enter into similar cooperative arrangements with other foreign regulatory authorities in order to avoid duplicate audit supervision and reduce compliance cost.* Please refer to the attached PDF for detail
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Mar 16, 2007
- Road Map for the Adoption of International Financial Reporting Standards
- The Financial Supervisory Commission held a ceremony together with Korea Accounting Institute on Thursday, March 15, to mark the announcement of the road map for the adoption of International Financial Reporting Standards (IFRS). Mr. Yoon Jeung-Hyun, Chairman of the FSC, gave the keynote address at the ceremony and noted that the road map marked a milestone in Korea’s embrace of global accounting standards. A number of dignitaries, including Sir David Tweedie, Chairman of the International Accounting Standards Board (IASB), and Mr. Tatsumi Yamada, a member of the IASB Board, also attended the ceremony to offer congratulatory remarks.Background of the IFRS road mapMuch progress has been made with the efforts to improve the accounting standards and strengthen the oversight of corporate financial reporting in the years following the 1997 financial crisis. But it has been generally assumed that the level of confidence of foreign investors and others in Korea’s corporate accounting has not matched the efforts undertaken thus far, in part because of accounting standards that differ from IFRS and other globally prevailing standards. With the globalization of capital markets and a growing need for accounting consistency worldwide, the road map the FSC announced on March 15 represents a major step forward that will significantly improve the comparability, the reliability, and the transparency of Korea’s corporate financial reporting in many meaningful ways.Outline of the IFRS road mapFinancial reporting under IFRS will be made mandatory for all listed companies.Simplified accounting procedures will be permitted for unlisted companies to avoid any undue compliance cost. Unlisted companies may also elect to issue financial statements under IFRS, but once IFRS is elected it may not be rescinded and replaced.Financial statements under IFRS may be reported beginning in 2009 (excluding financial service companies) and will be made mandatory for all listed companies beginning
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Mar 09, 2007
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Feb 02, 2007
- New Disclosure Measures for Foreign Securities Issuers
- The Financial Supervisory Service announced several new measures it plans to adopt in order to fine-tune disclosure regulations on foreign securities issuers toward global standards amid growing interest among foreign companies to make public offerings or list in Korea. The FSS also plans to issue a new publication entitled “Guide to Stock Offering and Listing by Foreign Issuers” that explains the stock offering and listing processes and related regulations (in Korean).Regulations on public offering and listing by foreign issuers have been continually amended and fine-tuned to global standards since 2005. They include primary listing of foreign companies and foreign holding companies along with globally accepted listing standards (Dec. 23, 2005), exemption from mandatory IPO allotment (20%) to employee stock ownership plan (Feb. 15, 2006), mandatory designation of domestic agent for investor protection (Sept. 13, 2006), and simplified reporting format for foreign issuers (Jan. 24, 2007).New Disclosure Measures for Foreign IssuersThe FSS is planning to adopt several globally accepted investor protection measures in response to public stock offering plans by foreign entities that are incorporated as holding companies offshore in places such as Bermuda and Cayman islands.Disclosure on subsidiary unitsFinancial and non-financial disclosures are to be provided on a consolidated basis for the subsidiary units of offshore holding companies in order to ensure appropriate disclosures on the business activities of subsidiary units that effectively represent the activities of the holding company.Financial disclosures include financial statements and audit opinion from an independent external auditor. Non-financial disclosures include disclosures on key business activities, board of directors, affiliated companies, management makeup, and transactions with related parties.Disclosure on corporate governance structureDisclosures on the corporate governance structure of offshor
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Feb 01, 2007
- FSS to Launch Electronic Foreign Investor Registration and English DART Website
- The Financial Supervisory Service will launch an electronic registration system for foreign investors and open an English DART website (http://enlgishdart.fss.or.kr) as part of an ongoing effort to simplify foreign investors’ investment procedures and improve their access to corporate information. DART, which stands for Data Analysis, Retrieval, and Transfer, is the FSS electronic disclosure system companies use to transmit regulatory filings and ongoing disclosures via the Internet.Electronic Registration of Foreign InvestorsUnder the current procedure, a foreign investor (or an agent) who wishes to acquire shares of listed companies and other exchange-traded securities submits an investment registration application along with the supporting documents to the FSS in person and returns three to four days later for the registration certificate.The new registration system, which is set to begin in May this year, will enable foreign investors to file investment registration applications and receive registration certificates electronically through financial institutions acting as their agents.Because the system utilizes information and telecommunication networks and electronic document exchange systems already used by financial institutions, no additional cost is expected from foreign investors or financial institutions. With electronic registration, the issuance of registration certificate, which numbers about 2,000 a year, is expected to be shortened from up to four days to no more than four hours.Opening of English DART WebsiteThe FSS will also open an English DART website (http://englishdart.fss.or.kr) on February 1 to improve foreign investors’ access to disclosures filed by Korea’s publicly traded companies. Foreign investors can use the English DART website to search all English disclosure documents voluntarily transmitted to DART and to Korea Exchange as well as corporate information available in English at Korea Listed Companies Association.The English DAR
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Nov 10, 2006
- Asset Management Companies' Preliminary Net Income:First Half of FY2006
- Regulatory filings by 49 asset management companies–36 domestic and 13 foreign–show preliminary net income for the first six months of FY2006 ended September 30 totaled KRW150.9 billion, up KRW93.6 billion from KRW57.3 billion a year earlier. Pretax income came to KRW200.0 billion, compared with KRW78.5 billion a year earlier.A large increase in management fees boosted by a surge in investment into stock funds pushed asset management companies’ net income for the period. Management fees, which averaged 63 basis points at end-September, compared with 58 basis points a year earlier, jumped KRW124.8 billion or 67.1% to KRW310.7 billion. Investment in stock funds, which typically generate higher management fees than other funds, more than doubled from KRW21.9 trillion at end-September, FY2005, to KRW46.4 trillion.Domestic asset management companies’ pretax income for the period totaled KRW155.8 billion, an increase of KRW91.2 billion or 141.2% from a year earlier. For foreign asset management companies, the total come to KRW44.2 billion, compared with KRW13.9 billion a year earlier.As of end-September, assets under management totaled KRW230.7 trillion (net asset basis), an increase of KRW25.2 trillion or 12.2% from KRW205.5 trillion a year earlier. Both stock funds and hybrid funds grew by KRW24.5 trillion and KRW9.5 trillion, respectively, from a year earlier, but money market funds fell by KRW15.5 trillion during the period. Assets under the management of domestic asset management companies came to KRW191.4 trillion. For foreign asset management companies, the total was KRW39.3 trillion.* Please refer to the attached PDF for details.
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Sep 12, 2006
- Equity Disclosure Filings First Half 2006
- An analysis of disclosure filings for investment in listed companies for the first six months of 2006 showed a total of 2,397 investors held five percent or more equity interests in 1,624 listed companies (700 Stock Market-listed and 924 KOSDAQ-listed). During the period, 2 tender offers and 122 proxy solicitations were made, compared with 5 and 108, respectively, during the same period a year earlier.Disclosures Filed under the “Five-Percent Rule”Disclosures filed under the five-percent reporting rule for the first six months of the year totaled 4,157, compared with 4,499 for H2, 2005, and 5,717 for H1, 2005. The total for H1, 2005, includes 1,791 re-filings made under the amended reporting rule that took effect March 29, 2005. Excluding the re-filings, the total for H1, 2005, was 3,926. Filings by foreign investors have steadily increased since 2003.By investment purpose, filings for exercising influence on the management totaled 1,609 (1,580 companies: 666 Stock Market-listed, 914 KOSDAQ-listed) as of the end of June. Those for investment only totaled 872 (1,139 companies: 516 Stock Market-listed, 623 KOSDAQ-listed).Filings by Foreign InvestorsA total of 307 foreign investors–288 legal entities and 19 individuals–held five percent or more equity interests in 505 listed companies, of which 242 were Stock Market-listed and 263 KOSDAQ-listed.Tender Offer FilingsTwo tender offer filings involving Choong Nam Spinning Co., Ltd. were made during the first six months of the year. There were no tender offers intended for enhancing management control or going private during the period.Proxy SolicitationsA total of 122 disclosures were filed for proxy solicitation during the first six months of the year. Of the total, 110 or 90.2% were for the purpose of meeting the quorum requirements in the general shareholders’ meetings. There were 12 filings for proxy contests during the period.* Please refer to the attached PDF for details.
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Aug 17, 2006
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May 04, 2006
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Feb 16, 2006
- Equity Disclosure Filings for Publicly Held Companies: 2005
- Equity disclosure filings for publicly held companies for 2005 show a total of 2,409 investors held, together with related parties, five percent or more of the outstanding shares of 1,600 publicly held companies–689 Stock Market-listed and 911 KOSDAQ-listed companies–as of the end of the year. Eight tender offers and 133 proxy solicitations were made during the year, compared with 16 and 156, respectively, for 2004.Disclosures Related to the Five-Percent RuleDisclosures filed under the five-percent reporting rule totaled 10,216, up 2,988 or 41.3% from 7,229 a year earlier. The total figure for 2005 included 1,791 re-filings mandated under the amended reporting rule that took effect March 29, 2005.A breakdown of the filings by investment purpose shows investors who disclosed “Exercising Influence on the Management” numbered 1,591–in 1,553 companies, 657 Stock Market-listed, 896 KOSDAQ-listed–in 2005. Investors who disclosed “Investment Only” numbered 884–in 942 companies, 422 Stock Market-listed, 520 KOSDAQ-listed).Filings by Foreign InvestorsA total of 267 foreign investors–253 legal entities and 14 individuals–held five percent or more of equity interests in 450 publicly held companies, of which 218 were Stock Market-listed and 232 KOSDAQ-listed.Tender Offer FilingsEight tender offer filings were made in 2005: three for increasing the management’s control and five for going private. One of the eight tender offer filings was made by a foreign investor. In 2004, there were 16 tender offer filings, of which four were filed by foreign investors.Proxy SolicitationsA total of 133 disclosures were filed for proxy solicitation in 2005. Of the total, 114 or 85.7% were for meeting the quorum requirements in the general shareholders’ meeting, compared to 119 or 76.3% in 2004. The rest were for proxy contests* Please refer to the attached PDF for details.
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Dec 29, 2005
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Oct 13, 2005
- Amended Regulation on Indirect Investment Asset Management Business to Take Effect on October 7, 2005
- The FSC/FSS amended Regulation on Indirect Investment Asset Management Business and the accompanying enforcement rules on September 30. The amended regulations, which take effect October 7, are intended to strengthen prudential oversight of asset management companies (AMCs) and ease restrictions on asset management activities. The following is a summary of the amended regulations.Prudential Oversight of AMCsAmended Investment Risk Weights on Net-Asset Basis(To take effect after six months from October 7, 2005)The risk weight for mark-to-market funds for the purpose of regulatory capital is to be differentiated according to the funds’ asset holdings in order to lower capital burden on AMCs with large funds. Prior to the amendment, 0.1% was uniformly applied as risk weight to all mark-to-market funds. Below is a table of amended new risk weights to be applied to mark-to-market funds on net-asset basis.The risk weight for book -value funds is to remain unchanged at the current uniform level of 0.2%. The same risk weight is to be applied to private equity funds managed by AMCs. For AMCs with outside directors and an audit committee in place, 10% of the risk amount determined is to be additionally deducted. In determining risk amount, borrowed funds for investment purposes are to be included in the net asset amount.Amended Management Status Evaluation(To take effect after six months from October 7, 2005)For assessment of capital adequacy of AMCs, the ratio of capital impaired is to be newly added to the quantitative capital assessment criteria so that undercapitalized AMCs do not receive a quantitative rating higher than the third (fair) grade. The effective capital adequacy ratio, which had varies little among AMCs, was eliminated from the quantitative capital assessment criteria.Prompt Corrective Action for AMCsWhere an AMC subject to prompt corrective action (PCA) satisfies the mandatory soundness standards with capital restoration or other necessary measures, the b
