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Feb 03, 2025
- Rule Changes Proposed to Establish Legal Grounds for Fractional Investment and Allow ATS to Trade ETFs
- The Financial Services Commission issued a preliminary notice of rule changes on February 3 regarding the Enforcement Decree and Enforcement Rules of the Financial Investment Services and Capital Markets Act (FSCMA) and subordinate regulations on financial investment businesses and the issuance and disclosure of securities. The rule changes being proposed address the following. First, there will be legal grounds established for fractional investment platforms issuing beneficiary certificates and securities lending intermediary platforms (both currently operate under the regulatory sandbox program). Second, trading exchange traded funds (ETFs) and exchange traded notes (ETNs) will be made possible via alternative trading system (ATS). Third, IPO bookrunners will be required to conduct due diligence and prohibited from accepting compensation outside the confines of the contract. Other rule changes include the followingmaking backdoor listing (where a larger sized non-listed firm determined by corporate value merges with a smaller sized listed firm) subject to listing review, allowing more types of foreign currency-denominated bonds (supranational bonds and Korean paper) to be included in the foreign currency repurchase agreements (repos) offered to investors, and raising the limit on retail investors over-the-counter (OTC) bond transactions in small scale, which are eligible for same-day transaction settlement (T+0), to KRW10 billion from KRW5 billion currently. The rule changes are put up for public comment until March 17 and expected to take effect from June 16 this year after going through a legislative review and a successive approval process. Establishing Legal Ground for Fractional Investment Fractional investment involves the sale of a share in underlying asset, such as real estate and intellectual property, after it has been securitized, and takes the form of public offering of securities. In general, it can take the form of issuing either non-monetary trust b
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Jan 24, 2025
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Jan 21, 2025
- Reform Plans for IPO and Delisting Rules
- On January 21, the Financial Services Commission and related organizations including the Financial Supervisory Service (FSS), Korea Exchange (KRX), Korea Financial Investment Association (KOFIA) and Korea Capital Market Institute (KCMI) held a joint seminar on improving initial public offering (IPO) and delisting rules, as part of the governments ongoing efforts for capital market reforms. At the seminar, the FSC unveiled reform plans for IPO and delisting rules and gathered feedback from various market participants. FSC Chairman Kim Byoung Hwan delivered his congratulatory remarks outlining the background and directions of the reform plans. The Chairman said that the market structural improvement is needed to boost the overall valuation of our capital market as the government has been pushing forward capital market reform initiatives since last year. Regulatory reforms on IPO and delisting rules will be pushed forward as another major task for the value-up initiatives, he emphasized. In regard with the IPO market, Chairman Kim said that reform plans will incentivize institutional investors to hold shares for a longer period under a lock-up commitment, which will help shift the IPO market more towards investments based on corporate value. Reforms will also strengthen the roles and responsibilities of underwriters for determining appropriate IPO prices and securing mid-to-long-term investors, he added. Regarding the delisting rules, Chairman Kim explained, the authorities will strengthen the requirements for companies to remain listed and streamline delisting procedures so that companies undermining market trust can be timely removed without delay. Along with this, Chairman Kim suggested that the government will consider overhauling the stock market structure to make it more efficient and provide stronger investor protection. We will seek differentiation and linkage between market segments so that companies can raise funds in the market tailored to their growth stage
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Dec 19, 2024
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Dec 19, 2024
- FSC and FSS Announce Measures to Ensure Market Stability and Bolster Support for the Real Economy
- The Financial Services Commission and the Financial Supervisory Service announced on December 19 a set of measures intended to ensure financial market stability and enhance the financial sectors capacity to support domestic businesses and the real economy in preparation for a potential expansion of market volatility caused by ongoing uncertainties at home and abroad. After having a series of market monitoring and industry group meetings with financial companies, the capacity enhancement measures for financial companies soundness, liquidity, and financial conditions have been drawn up well within the scope of international standards, such as the Basel III framework. First, the stress capital buffer requirement for banks that was initially set to be introduced this year will be postponed until the second half of 2025. Authorities will reexamine the exact timeline and method for introducing stress capital buffers in the first half of 2025. Second, with regard to the foreign exchange (FX) positions of banks, the non-hedgeable types of FX positions, such as investments on overseas branches that are not significantly exposed to the risk of short-term volatility in the FX market, will not be counted toward the calculation of their FX risk exposures. Third, when insurance companies make contributions to the stock market stabilization fund through purchase of the fund, the amount being calculated toward the risk exposure of their K-ICS (Korea Insurance Capital Standard) ratios will be reduced from the entire amount to half the amount. Moreover, the following measures have been prepared to lower the burden of financial companies in issuing loans and investing in domestic companies, thereby enhancing financial companies capacity to support domestic businesses and the real economy. Fourth, changes will be made to the 400 percent risk weight currently applied across the board on new technology investment funds, venture funds, and other types of investment association funds estab
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Dec 10, 2024
- FSC Chairman Holds Meeting with Foreign Financial Companies
- Chairman Kim Byoung Hwan of the Financial Services Commission met with officials from foreign financial companies on December 10 to have talks on recent political and economic situations in Korea and to assure that the Korean government has sufficient capacity to ensure stability in financial markets. At the meeting, Chairman Kim emphasized that despite increased political uncertainties, the countrys economic issues are being managed in a consistent and stable manner with the Deputy Prime Minister leading the governments economic team. Chairman Kim also said that the government has maintained a high level of preparedness for the implementation of market stabilization measures, and that key policy agendas, such as the soft-landing of the real estate project finance market, Corporate Value-up Program, and capital market reform initiatives, will continue to be pursued according to the previously set schedule. In this regard, Chairman Kim said that the government will make efforts to more closely communicate with foreign financial companies to provide adequate explanations about the ongoing situations and the governments plans. The officials from foreign financial companies attending todays meeting expressed a view that the current political situation will not significantly affect the fundamentals of the Korean economy or have negative impact on the economy on a continuing basis. They showed expectations that as long as the current political uncertainty is resolved quickly, financial markets will also return to stability in no time. However, to help ease short-term volatility in the stock market, participants also raised a view that it is necessary for institutional investors, such as pension funds, to play a more active role in the market. * Please refer to the attached PDF for details.
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Dec 09, 2024
- FSC Holds Market Monitoring Meeting (Dec. 9)
- Chairman Kim Byoung Hwan of the Financial Services Commission presided over a market monitoring meeting on December 9 with officials from the Financial Supervisory Service, five major financial holding companies, policy financial institutions, and related organizations and industry associations to check market situations and discuss response measures. The following is a summary of Chairman Kims opening remarks. A Summary of Chairmans Remarks At the Ministerial Meeting on Economic Affairs held yesterday, the government made an announcement that the economic team will spare no effort in ensuring a stable management of the economy despite looming uncertainties caused by recent political situations. In this regard, the FSC and the FSS will continue to do our parts and carry out our responsibilities in unwavering ways to ensure the maintenance of stability in our financial system and the external credibility in the financial sector. While continuing to maintain a real-time market monitoring system around the clock, authorities are prepared to promptly implement market stabilization measures when it becomes necessary, including a KRW10 trillion stock market stabilization fund, a KRW40 trillion bond market stabilization fund, the corporate bond and commercial paper (CP) purchase program, and the supply of foreign currency liquidity through the Korea Securities Finance Corporation. Meanwhile, authorities will seek to consistently pursue financial policy agendas according to the previously planned schedule. While ensuring a seamless implementation of the previously introduced measures, such as the Corporate Value-up Program, establishing a system designed to prevent illegal short sale activities, and granting a license to a new internet-only bank, authorities will keep pursuing the agendas that were slated for December, such as the measures to ease the financial burden of small merchants and self-employed business owners and the indemnity health insurance reform measures. To
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Dec 04, 2024
- FSC Holds Market Monitoring Meeting (Dec. 4)
- Chairman Kim Byoung Hwan of the Financial Services Commission convened a meeting on December 4 with officials from related authorities, financial institutions, and industry groups to check market situations and discuss response measures. The following is a summary of Chairman Kims opening remarks. A Summary of Chairmans Remarks Currently, the situation surrounding the foreign exchange market and overseas-listed stocks of Korean companies appear to be stabilizing. However, as there are concerns about a potential rise in volatility, financial authorities will utilize all available measures to prevent the spread of market anxiety and ensure a seamless and stable operation of financial markets in close coordination with policy financial institutions, related organizations, and industry groups. At the Emergency Meeting on Macroeconomic and Financial Issues (F4 Meeting) held earlier this morning, authorities decided to ensure the supply of unlimited liquidity support until the conditions return to normal in the financial markets. The measures include stock market stabilization fund in the amount of KRW10 trillion, bond market stabilization fund in the amount of KRW40 trillion, and the corporate bond and commercial paper (CP) purchase program all aimed ensuring market stability. At the same time, authorities will closely monitor financial companies foreign currency liquidity conditions to ensure their soundness, while supplying foreign currency liquidity through the Korea Securities Finance Corporation to prevent the risk of margin call emanating from a potential weakening of the Korean won. In responding to market situations, each organization is asked to strictly follow its own contingency plan. In this regard, policy financial institutions are asked to mobilize all available resources to ensure an active and flexible supply of funds to make sure that vulnerable groups, small merchants, and businesses face no challenges in meeting their financing needs. The stock market
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Sep 26, 2024
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Aug 27, 2024
- 2024 Korea Fintech Week Kicks Off on August 27
- 2024 Korea Fintech Week kicks off on August 27 with major fintech businesses, financial companies, related organizations, academic institutions, and foreign governments and organizations at Dongdaemun Design Plaza (DDP) in Seoul. The expo will be held for three days between August 27 to 29 under the theme of Beyond Boundaries: Fintech and AI Redefining Finance, providing opportunities to lure investment and share updates on the newest fintech and AI technologies and trends. 85 exhibition booths and 109 businesses and associations will participate to promote innovative technologies and attract investments Chairman Kim Byoung Hwan of the Financial Services Commission delivered welcoming remarks in which he emphasized the importance of AI as a game changer for industries and society, and how we harness AI will determine the competitiveness of individuals and companies in the future. Chairman Kim vowed to support the finance industry so that it could play a leading role in propelling Korea into the top three nations in AI sector. Chairman Kim outlined four key directions for digital finance policies aimed at facilitating fintech and the digital transformation (DX) of the financial sector. First, he emphasized the need to revisit financial regulations established in the analog era to accelerate the digital transformation of finance. This will involve rationalizing entry and conduct regulations for financial companies, as well as standards for information processing, such as cloud usage. Second, Chairman Kim highlighted the importance of strengthening collaboration between fintech companies and financial companies. To this end, the regulations on financial institutions investments in fintech businesses will be re-evaluated, and discussions will begin on reforming the regulatory framework governing outsourcing agreements, as well as improving the electronic financial systems, to allow the emergence of diverse business models in the era of big blur. Third, Chairman Kim anno
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Jul 25, 2024
- 2024 Korea Fintech Week to Kick Off on August 27
- The Financial Services Commission announced that this years global fintech expo, 2024 Korea Fintech Week, is scheduled to kick off on August 27 with major fintech businesses, financial companies, related organizations, academic institutions, and foreign governments and organizations participating at Dongdaemun Design Plaza (DDP) in Seoul. This years global fintech expo, the largest ever in scale, will be held for three days between August 27 and 29 under the theme of Beyond Boundaries: Fintech and AI Redefining Finance, providing visitors and participants with opportunities to share global trends on artificial intelligence (AI) and fintech innovation and gain insights on financial industrys future ecosystem. After an opening ceremony, there will be a policy information session provided by the FSC on Koreas fintech policy direction for this year and an on-site QA session with officials. Visitors will have chances to participate in eleven different seminars throughout three days, dealing with topics, such as AI and fintech, fintech investment strategy, ESG, and so on, with specific focus on AI technologies and their application. In addition, there will be ample opportunities to attract investments through investor relations (IR) and reverse IR events, which will help to promote investments for fintech firms to scale up or expand their businesses overseas. There will be a total of 85 exhibition booths organized into four different exhibition hallsfintech hall, financial hall, cooperating organization hall, and global hallshowcasing latest fintech services embracing AI technologies. During the three-day period, various consulting and networking programs will also be made available for fintech startups, entrepreneurs, and young adults seeking career opportunities in fintech. Visitors can attend and tour at free of charge. For more information please visit official expo website (https://2024.fintechweek.or.kr/). * Please refer to the attached PDF for details.
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Jul 22, 2024
- Vice Chairman Visits London to Promote Capital Market Reform Programs and Strengthen Bilateral Cooperation
- Vice Chairman Kim Soyoung of the Financial Services Commission visited London, the United Kingdom (UK) from July 16 to 19 in an effort to promote Koreas capital market reform and corporate value-up programs to global investors and to strengthen financial cooperation between Korea and the UK. IR with Global Investors On July 17, Vice Chairman Kim held an investor relations event for global investors and provided key information about the progress of Koreas capital market reform initiatives aimed at boosting market accessibility, guaranteeing fairness and transparency in market transactions, and enhancing shareholder values. In this regard, Vice Chairman Kim provided detailed information about the opening up of the foreign exchange (FX) market, plans to introduce an alternative trading system (ATS), short sale reform measures, and the corporate value-up program. UK-Korea Financial Forum On July 17, Vice Chairman Kim also attended the UK-Korea Financial Forum and delivered a congratulatory speech. In his remarks, Vice Chairman Kim talked about the importance of maintaining strong cooperation with the UK to effectively respond to various challenges and opportunities presented by shifting global market environment, such as technological advance and climate change. Meeting with Lord Mayor of the City of London On July 18, Vice Chairman Kim held a meeting with Lord Mayor Michael Mainelli of the City of London and exchanged views on key issues surrounding major elections around the world this year and policies to promote global financial hubs in both countries. At the meeting, Vice Chairman Kim took time to explain Koreas key financial policies, such as open banking, establishing a loan transfer infrastructure to facilitate refinancing of personal loans at lower interest rates, introducing financial MyData service, adopting guidelines on ESG disclosure, and so on. Meeting with FTSE Russell Following the meeting with the Lord Mayor of the City of London, Vice Chairman Kim vi
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Jul 09, 2024
- Insider Transactions of Listed Companies Subject to the Prior Disclosure Requirement from July 24
- The Financial Services Commission announced that regulatory changes, which require insider transactions of listed companies to be disclosed 30 days prior to their planned transaction dates, have been approved by the government at a cabinet meeting held on July 9. The revision proposal for the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and its subordinate regulations will go into effect from July 24. The rule changes being introduced specify (a) the entities that will be exempted from the prior disclosure duty, (b) the volume and type of transactions exempted from the disclosure duty, (c) details regarding the procedure and method of disclosure, (d) specific reasons or cases where insider transactions plan can be withdrawn, and (e) a clearer method for calculating penalty surcharges that can be imposed on rule-breakers. First, the rule changes being introduced exempt pension funds and other financial investors that are expected to have higher levels of internal control standards and are unlikely to misuse material nonpublic informationsuch as collective investment vehicles, banks, insurance companies, specialized credit finance companies, financial investment businesses, venture capital firms, and the Korea SMEs and Startups Agencyfrom the duty to disclose their stock transaction plans in advance for insider transactions. Moreover, an exemption from the prior disclosure duty will also be granted to foreign investors that are deemed to have an equivalent status to the above mentioned domestic financial investors to ensure more equal treatment of both domestic and foreign investors. Second, the rule changes being introduced grant an exemption if the volume of transactions in particular securities typesover the past six months is less than one percent of the total number of shares issued by the company within that particular year and if the total amount of transactions is less than KRW5 billion. Moreover, an exemption from th
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Jul 03, 2024
- SFC Imposes Penalty Surcharges on Global Investment Banks for Violating Short Sale Regulations
- The Securities and Futures Commission, a sub-commission within the Financial Services Commission responsible for overseeing the securities and futures markets, held the thirteenth regular meeting on July 3 and decided to impose penalty surcharges amounting to KRW27.173 billion in total on two former Credit Suisse affiliated investment banks for violating short sale regulations under the Financial Investment Services and Capital Markets Act (FSCMA). The level of penalty surcharge imposed on each of the two former Credit Suisse affiliated entities is the largest (KRW16.94 billion on Credit Suisse AG) and the third largest (KRW10.23 billion on Credit Suisse Singapore Ltd.) ever since the penalty surcharge system began to be implemented on naked short sale activities in April 2021. In the case of Credit Suisse AG (currently UBS AG), from April 7, 2021 to June 9, 2022, the investment bank was found to have engaged in naked short sales in the amount of about KRW60.33 billion (162,365 shares on 20 stock items) without possessing these stocks at the time of placing short sale orders. In the case of Credit Suisse Singapore Ltd., from November 29, 2021 to June 9, 2022, the investment bank was found to have engaged in naked short sales in the amount of about KRW35.28 billion (401,195 shares on five stock items) without possessing these stocks at the time of placing short sale orders. In addition, prior to todays meeting, the SFC decided to impose administrative fines worth KRW284.2 million in total on four domestic financial investment businesses, two foreign financial investment businesses, and an individual investor for violating their net short position balance reporting and disclosure duties under the FSCMA. The financial authorities will continue to strictly deal with naked short selling and other unfair trading activities in capital market to promote soundness in market transactions. * Please refer to the attached PDF for details.
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Jun 21, 2024
- Market Access Improved for Foreign Investors with Abolishment of Investment Registration Certificates
- The Financial Services Commission announced that foreign investors access to Korean capital market has been improved with the abolishment of foreign investors prior registration requirement from December 14, 2023. As it has been repeatedly pointed out in the past that this prior registration requirement was standing in the way of foreign investors access to Korean capital market, the FSC decided to abolish the registration requirement (IRC: Investment Registration Certificate)which had been in place for about 30 years since 1992through a revision of the Financial Investment Services and Capital Markets Act (FSCMA) in December last year. As a result, without first having to register with the Financial Supervisory Service (FSS), foreign investors are now able to use either legal entity identifiers (LEIs, for corporate investors) or passport numbers (for individual investors) to open their investment accounts at financial companies and make investments in domestically listed securities. After monitoring the trend in new account opening, the authorities found that during the six-month period after the abolishment of the prior registration requirement (between December 15, 2023 and June 12, 2024), there were 1,432 new investment accounts opened by foreign investors using either LEIs or passports. Among them, there were 1,216 corporate entities and 216 individual investors with new accounts opened at 36 securities firms and banks. In particular, from March this year, the number of new account opening by foreigners has grown to about 300 to 400 every month. Considering that the average monthly IRC issuance was 105 in the year of 2023, the abolishment of the prior registration requirement appears to be contributing to the enhancement of market access for foreign investors. In this regard, FSC Vice Chairman Kim Soyoung stated that the abolishment of the prior registration requirement has made it more convenient for foreign investors to open an account, and so consequently, t
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Jun 13, 2024
- Short Sale Reform Measures Introduced to Prevent Illegal Trading Activities and Protect Investors
- The Financial Services Commission announced the finalized version of short sale reform measures on June 13, which include plans to establish a completely electronic short sale processing system until March 2025, limit the length of stock repayment period for both institutional investors and retail investors to maximum 12 months, and strengthen the severity of penalties on illegal short sale activities when the amount of unfairly gained profits is KRW5 billion or more. In November 2023, the FSC decided to ban short selling in domestic stock markets (until the end of June 2024), because authorities became concerned about naked short selling activities taking place routinely, which could potentially disrupt domestic stock markets fair pricing function. Since then, public debates and discussions have taken place to make improvements to the short selling system, and the ruling party and the government held a consultative meeting to announce the finalized set of reform measures on June 13. Background On November 16, 2023, the FSC introduced its plan to seek short sale reform measures at the meeting held with representatives from the private sector, the ruling party of the National Assembly, and related authorities. The issue of developing an electronic short sale processing system, which was discussed multiple times previously, has been thoroughly dealt with in taskforce meetings jointly led by the Financial Supervisory Service (FSS) and the Korea Exchange (KRX). After having active communication with market participants, including foreign investors, the authorities have come up with a set of practical measures for developing an electronic short sale processing system. In addition, the authorities have had a series of meetings and discussions with experts, industry representatives, and the public to collect wide-ranging opinions on the overall stock short sale system before arriving at this finalized set of reform measures. Meanwhile, the authorities have continued to mak
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May 02, 2024
- Guidelines on Corporate Value-up Plan Unveiled to Support Listed Companies' Voluntary Efforts to Boost Corporate Value
- The Financial Services Commission (FSC), the Korea Exchange (KRX), Korea Capital Market Institute (KCMI) and relevant organizations held the second seminar on the Corporate Value-up Support Plan on Thursday, May 2. At todays seminar, the draft Guidelines for Corporate Value-up Plan, one of key pillars of the Corporate Value-up Program, was unveiled to gather opinions from various stakeholders. Congratulatory Remarks by FSC Vice Chairman FSC Vice Chairman Soyoung Kim delivered congratulatory remarks reaffirming the governments strong will towards capital market reforms. In addition to regulatory reform initiativesin our capital markets that the government has made over the past two years, listed companies value enhancement efforts will help Koreas stock market tackle Korea discount and rise steadily over mid-to long-term, Vice Chairman said. Regarding the draft Guidelines on Corporate Value-up Plan unveiled today, Vice Chairman emphasized the importance of such plans, saying that corporate value-up plans will enable listed companies to communicate with shareholders and market participants about a comprehensive picture over the companies future, and allow investors to better understand companies in which they are going to invest in and make well-informed decision, thereby listed companies will be able to get proper market valuation for their true intrinsic value or expected value. He added that the corporate value-up program shall be deemed as a long-term initiative. In this regard, the guidelines unveiled today are not the end, but the beginning of our long-term plan, Vice Chairman said. Various incentives and support measures including guidelines, consulting, training, etc, will be provided to encourage active participation of listed companies, and then investors will properly evaluate companies value enhancement efforts and reflect them into their investment decision. The government and relevant organizations will continue to support companies corporate value-up ef
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Apr 02, 2024
- Future Finance Taskforce Kick-off Ceremony Takes Place
- The Financial Services Commission held a kick-off ceremony for future finance taskforce on April 2, together with relevant agencies, thinktanks, and academia. In accordance with the 2024 financial policy agendas, a taskforce on future finance has been organized with the aim of finding ways to tackle various challenges, such as climate crisis, population decline, and digital transformation. At the meeting, participants freely discussed about challenges and opportunities in the financial sector brought by demographic shift, climate change, and technological advancement. In his opening remarks, FSC Vice Chairman Kim Soyoung said that we are in the midst of mega trends, such as rapid change in population structure, climate change, and technological innovation. In this regard, Vice Chairman Kim said that these challenges constitute the known unknowns and that they demand systematic analysis and measured responses from both the public and private sectors. The future finance taskforce will be organized into three working groupspopulation, climate, and technology. First, the population working group aims to identify demographic factors that will have impact on the real economy and financial markets. It will also seek to explore ways to more effectively provide financial support measures to help young adults and newlyweds. Second, the climate working group aims to seek ways to reach the 2050 carbon neutral goal and enhance corporate climate adaptation capacity with a long-term perspective. It will also explore various ways to promote climate financing in low-carbon transition, renewable energy, and so on. Third, the technology working group aims to promote the use of advanced digital technology, such as blockchain and artificial intelligence, in financial services to boost user convenience and enhance the competitiveness of financial companies. It will also explore ways to more effectively regulate the use of new technologies and ensure financial stability and consumer prote
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Mar 25, 2024
- FSC to Bolster the Role and Function of the Council on International Financial Cooperation
- The Financial Services Commission and the Council on International Financial Cooperation announced measures to bolster the role and function of the CIFC for 2024 on March 25. The CIFC was launched in 2013 with aims to support domestic financial institutions business expansion overseas and facilitate their sharing of experience and know-how with other countries. Financial institutions from the public and private sectors as well as financial industry associations are members to the CIFC, which is currently run by the Korea Institute of Finance. Since its establishment, domestic financial institutions demand for overseas business expansion has grown. In order to meet this demand and more systematically support domestic financial companies overseas business expansion, the FSC has prepared the following measures to bolster the role and function of the CIFC. First, the networking program including forums and seminars will be held more frequently and more in association with other relevant programs made available by international organizations, for instance. Second, an integrated database system will be set up to facilitate information sharing and exchange between members. Third, the training program will be overhauled to provide more effective vocational training courses on a longer-term basis. Fourth, a visiting scholars program will be newly introduced to invite senior officers from overseas financial regulatory agencies for joint research projects and collaboration. In 2024, this research program will begin with Indonesia and then be expanded to Vietnam. In 2024, the CIFC plans to hold financial cooperation forums twice to provide more opportunities for networking. The CIFC has plans to offer long-term training courses to foreign government officials from Laos, Thailand, Cambodia, and Malaysia. With its organizational capacity expected to grow beginning from this year, the CIFCs role of serving as a control tower for domestic financial sectors business expansion overse
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Feb 28, 2024
- Rule Changes Proposed Regarding Insider Transactions under the FSCMA
- The Financial Services Commission issued a preliminary notice of rule changes being proposed concerning the ex-ante disclosure requirement for insider transactions under the Financial Investment Services and Capital Markets Act (FSCMA). With regard to the ex-ante disclosure requirement for insider transactions, the revision proposal specifies the entities that will be exempted from the disclosure duty, the volume and type of transactions that will be exempted from the disclosure duty, and the procedure and method for disclosure. First, the rule changes being proposed exempt pension funds and other financial investors that are expected to have higher levels of internal control standards and are unlikely to misuse material nonpublic informationsuch as collective investment vehicles, banks, insurance companies, specialized credit finance companies, financial investment businesses, venture capital firms, and the Korea SMEs and Startups Agencyfrom the duty to disclose their stock transaction plans in advance for insider transactions. Moreover, an exemption from the ex-ante disclosure duty will also be granted to foreign investors that are deemed to have an equivalent status to the above mentioned domestic financial investors to ensure more equal treatment of both domestic and foreign investors. Second, the rule changes being proposed grant an exemption if the volume of transactions in particular securities typesover the past six months is less than one percent of the total number of shares issued by the company within that particular year and if the total amount of transactions is less than KRW5 billion. Moreover, an exemption from the ex-ante disclosure duty will also be granted for transactions resulting from a statutory requirement, tender offers, or acquisitions or dispositions following corporate spin-offs or mergers. Third, the rule changes being proposed require that companies insider transaction plans specify the expected transaction price and volume as well as t
