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Nov 05, 2023
- FSC Decides to Ban Stock Short Selling Until June 2024 and Seek Measures to Improve the System
- The Financial Services Commission held a meeting on November 5 where the authorities decided to ban all stock short selling in domestic markets (all KOSPI, KOSDAQ and KONEX listed items) effective from Monday, November 6, 2023 until the end of June 2024. With the continuation of high interest rate environment and stagnant growth in the global economy, coupled with geopolitical risks such as the armed conflict between Israel and Hamas, there are growing uncertainties for the Korean economy. In particular, during the second half of this year, stock market volatility in domestic stock markets has risen to much higher levels compared to other major markets overseas,which caused anxiety in the market. Despite a series of measures introduced in the past,recently, the authorities have discovered a number of illegal naked short selling practices conducted by foreign and institutional investors, raising concerns about the fair pricing function of domestic stock markets. Recently, a large-scale naked short selling case involving global investment banks was detected, and an investigation is currently taking place with discovery of additional unlawful activities. As such, the FSC finds that the situation with illegal short selling is very dire as it can erode the fair pricing function of the market and degrade confidence in the market. Therefore, considering the need to preemptively respond to the rising market uncertainties and address concerns about the potential weakening of the markets fair pricing function, and with the practice of illegal naked short selling taking place in a more routine way, the FSC decided to ban short selling on all domestic stock items until the end of June next year. Meanwhile, during the period of banning short selling, the government will work on proactive measures to improve the system in a way that will help to root out illegal short selling activities when short selling resumes thereafter. In this regard, first, the authorities will work on mea
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Oct 31, 2023
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Oct 19, 2023
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Oct 18, 2023
- FSC Holds Meeting to Check Financial Market Situation
- The Financial Services Commission held a meeting with the Financial Supervisory Service and industry representatives on October 18 to review financial market situations, potential risk factors and ways to handle them, chaired by FSC Vice Chairman Kim So-young. At the meeting, the authorities shared the same view that there are ongoing risk factors in financial markets due to the possibility of continuing high interest rates caused by a prolonged policy tightening in the U.S. and uncertainties surrounding the Israel-Hamas conflict. Therefore, the FSC, the FSS and financial industry groups agreed to maintain strong communication and cooperation. Despite these downside external risks, Vice Chairman Kim said that the domestic financial market conditions appear to be stable and that it is very unlikely that market situation will abruptly turn unstable as in the previous year since there are less uncertainties about the interest rate expectation in major economies and the financial institutions liquidity and risk management conditions have been improved compared to a year ago. However, as it is always possible that an external shocksuch as the one caused by the Israel-Hamas warcan deepen market anxiety when combined with vulnerabilities in domestic markets, Vice Chairman Kim said that it is necessary to continue to proactively deal with the vulnerable areas in domestic financial markets. With regard to the uncertainties surrounding the Israel-Hamas conflict, Vice Chairman Kim urged financial institutions to stay vigilant and secure a sufficient level of foreign currency liquidity to be adequately prepared. At the meeting, the authorities also discussed ways to avert excessive money moves in the financial sectors in the final three months of the year as competition to win over more deposits toward the end of the year led to market instability last year. In this regard, from September this year, the FSC and the FSS held a series of meetings with the financial sectors to che
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Sep 11, 2023
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Aug 31, 2023
- Enhanced Transparency and Investor Protection Measures on CFD Transactions to Take Effect from September
- The Financial Services Commission announced that a set of improvements to the rules on contract for difference (CFD) trading will take effect from September 1. The improvement measures include (a) provision of more transparent investment information to investors, (b) resolving the issue of regulatory arbitrage vis--vis credit loans and (c) strengthening protection for retail investors. First, from September 1, information about the actual investor type (individual, institution or foreign investor) will be displayed and provided on Korea Exchange (KRX)s trade data system (data.krx.co.kr) for CFD transactions. In addition, as in the case with credit loan balance, from September 1, CFD balances will be disclosed to enable the use of these data as a reference for investment. The overall CFD balance can be found on a website (freesis.kofia.or.kr) operated by the Korea Financial Investment Association. Meanwhile, information about CFD balances by item will be ready for viewing on HTS (home trading system) and MTS (mobile trading system) within September as each securities firm needs to finish up preparing relevant data network system. Second, there are stronger investor protection measures taking effect from September 1. As a new over-the-counter (OTC) derivatives investment requirement, for CFD transactions, retail investors need to be verified of having sufficient investment experience by securities firms. Retail investors need to show that they have maintained a monthly average balance of KRW300 million or more for one year or more within the past five years for transactions of equity stocks, derivatives products or highly complex derivatives-linked securities. In addition, retail investors applying to attain the status of a qualified professional investor will need to go through an in-person verification process (including video call) conducted by a securities firm. Third, CFD traders will need to deposit at least 40 percent of the amount of CFD trading as a requireme
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Aug 30, 2023
- 2023 Korea Fintech Week Begins
- Koreas annual global fintech expo, 2023 Korea Fintech Week, will be held for three days from August 30 to September 1 with domestic fintech firms, financial companies, relevant organizations and foreign governments and institutions joining at Dongdaemun Design Plaza (DDP) in Seoul. The three-day (Aug 30 to Sep 1) fintech expo this year is the largest ever in its scale featuring a variety of exhibition halls as well as seminars and educational and experiential programs under the theme of the new wave of fintech. During the opening ceremony, Vice Chairman Kim So-young of the Financial Services Commission delivered welcoming remarks in which he emphasized the need to revitalize the fintech industry to propel innovation and continuous growth of the fintech industry. In this regard, Vice Chairman Kim laid out three key policy directions to support the fintech industry. First, the government will strengthen support for fintech firms business expansion to overseas markets. Second, the government will facilitate more cooperation between financial companies and fintech businesses. Third, the government will reform fintech regulations to make them more reasonable to ensure that fintech businesses are able to take advantage of new technologies and drive innovation. At the same time, Vice Chairman Kim said that the government will directly engage and communicate with fintech enterprises and make sure that a variety of assistance is available on the ground so that our fintech industry can continue to grow amid digital transformation. Following the opening ceremony, a memorandum of understanding (MOU) signing event was held between financial companies, big tech platform businesses and Korea Growth Investment Corporation for establishing a second batch of fintech innovation fund in the amount of KRW500 billion for four years (2024-2027). After the opening ceremony featuring speeches by notable dignitaries, a policy briefing session is scheduled to be held during which visitors can
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Aug 21, 2023
- 2023 Korea Fintech Week to Kick Off August 30
- The annual global fintech expo, 2023 Korea Fintech Week, will kick off on August 30 with domestic fintech firms, financial companies, relevant organizations and foreign governments and institutions joining at Dongdaemun Design Plaza (DDP) in Seoul. The three-day (Aug 30 to Sep 1) fintech expo will be the largest ever in its scale featuring a variety of exhibition halls as well as seminars and educational and experiential programs under the theme of the new wave of fintech. After an opening ceremony featuring speeches by notable dignitaries, a policy briefing session is scheduled to be held during which visitors can learn about the Korean governments fintech policies as well as relevant fintech support programs made available by regional government bodies. Twelve different themed seminars are scheduled throughout the three-day expo period, inviting fintech experts and related organizations to have in-depth discussions about some of the most trending issues in fintech, such as payments, security, data usage, collaboration with a financial company and entering overseas markets. In particular, a joint fintech session with major international organizations (WB, EBRD, UNIDO and IFC) will provide an invaluable opportunity for visitors to get insights into global fintech trends and future development of the industry as the seminar will deal with the topics such as fintech and the future finance and linking sustainable development and fintech. There will be 82 exhibition booths organized into the fintech hall, financial hall, cooperating organizations hall and global exhibitor hall, showcasing innovative technologies and products from 107 businesses and organizations, which is the largest scale ever in terms of the number of on-site exhibition booths. A variety of helpful programs and events including global fintech: spoken by foreigners, fintech connecting day, fintech idea contest and fintech company IR pitching day as well as fintech job mentoring and career consulting wi
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Aug 17, 2023
- FSC Vice Chairman Holds Media Briefing on the Progress and Achievements of Capital Market Reform Agendas
- Vice Chairman Kim So-young of the Financial Services Commission held a media briefing on the progress and achievements of the governments capital market reform agendas on August 17. The following is a summary of Vice Chairman Kims remarks. I. Key Achievements This administration has been actively pursuing capital market reforms as a key part of the governments policy priority. In particular, the government has taken bold steps to resolve the problem of the so-called Korea discount by enhancing investor protections, removing outdated regulations and overhauling rules to foster innovation in the market. Despite the presence of difficult economic and financial conditions, there have been some favorable outcomes achieved thank to active cooperation between relevant institutions and industries. Restoring Investor Trust First, the government has prioritized in implementing a set of measures aimed at restoring investors trust in the capital market. In this regard, the governments policy focused on (a) strengthening the rights and interests of general shareholders, (b) bolstering response against fraudulent and unfair trading activities, and (c) ensuring order and fairness in the market. With regard to strengthening protections for general shareholders, we have put in place three layers of protection mechanisms at the end of last year to ensure that the rights and interests of general shareholders are thoroughly guaranteed in an IPO of a split-off subsidiary. Since the introduction of the measures, we have seen changes in corporate practices as more companies are drawing up shareholder protection plans on their own and communicating with shareholders to seek their consent. To protect general shareholders from unforeseen damages caused by insider transactions involving large shareholders or executive officers, we introduced a rule requiring corporate insiders to disclose their share trading plans before the expected trading date. To ensure that general shareholders can also
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Aug 16, 2023
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Jul 17, 2023
- Authorities to Ease Rules on Overseas Subsidiary Ownership of Financial Companies
- The financial regulatory reform committee held its 8th meeting on July 17. At the meeting, participants discussed (a) measures to ease rules on domestic financial companies ownership of subsidiaries in overseas markets, (b) ways to improve licensing standards on mergers between savings banks and (c) recent progress in the implementation of financial regulatory reform agendas sought by the committee. With regard to the measures to ease rules on financial companies ownership of subsidiaries in overseas markets, the proposed measures will first ease rules on domestic banks, insurance companies, specialized credit finance companies and fintech businesses making investment in foreign financial and non-financial companies within the scope of regulatory boundaries exhibited in overseas markets. For instance, a specialized credit finance business specializing in auto finance products may be able to acquire a rental car business in an overseas market to expand its sales operation. An insurance company will be able to own a foreign bank operating in an overseas market. A fintech business belonging to a domestic financial holding company can acquire an investment advisory or investment consulting business as a subsidiary. As many financial companies have been making requests to ease regulations regarding their foreign subsidiary holdings, it is expected that business diversification driven by local demand will help boost their competitiveness in overseas markets. Second, the proposed measures will ease rules on the maximum level of credit extension allowed for foreign subsidiaries. Through a revision to the supervisory regulations on financial holding companies, authorities plan to increase the maximum level of credit (within 10%p) that can be extended by a financial company to its foreign subsidiary for certain period of time (i.e. for first three years). Third, for the rules that have been set up for domestic environment and are thus not quite suitable to be applied on forei
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Jun 21, 2023
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Jun 19, 2023
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Jun 12, 2023
- 2023 Korea Fintech Week Scheduled to be Held from August 30 to September 1
- The annual global fintech expo, 2023 Korea Fintech Week, is scheduled to be held from Wednesday, August 30 to Friday, September 1 at Dongdaemun Design Plaza (DDP) in Seoul this year. The 2023 Korea Fintech Week will be held on the theme of the new wave of fintech, providing a venue for fintech businesses, financial companies, big tech platforms and investors to come together to share some of the latest fintech trends, pitch innovative business models and promote investment in the fintech industry. A variety of programs including fintech exhibitions, theme-based seminars and events for first-hand fintech experience will be available for participants. In order to actively support domestic fintech firms business expansion in overseas markets, this years Korea Fintech Week will have an expanded size of global hall to promote participation by many investors, accelerators and venture capitalists from many different countries. In addition, a collaboration hall will be newly set up for operation this year to encourage participation by the entire domestic fintech ecosystem including local government bodies, relevant organizations and universities. Also, a variety of helpful programs and events including a global fintech talk with a foreign influencer, fintech idea contest, finance-themed musical and fintech job mentoring and career consulting will be available to help visitors to learn about various fintech services and trends in an easy and fun way. It is expected that the 2023 Korea Fintech Week will provide vast opportunities to expand and reinvigorate Koreas fintech ecosystem. * Please refer to the attached filefor details.
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Jun 05, 2023
- Foreign Investor Registration Requirement to be Abolished in Korea
- The government approved a revision bill of the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) abolishing the foreign investors registration requirement at a cabinet meeting held on June 5. The foreign investor registration system, which has been in place for about three decades since 1992, will be abolished starting from December 14 this year, six months after promulgation of the revised law which is expected to be on June 13. Under the foreign investor registration system, foreign investors had to register with the Financial Supervisory Service (FSS) prior to investing in locally listed securities (stocks, bonds, etc.). For foreign investors, opening an investment account at a securities firm was possible only after registering with the authority and being assigned a registration certificate (foreign investor ID). As this process can be time-consuming and requires much paperwork, this rule was pointed out as a significant barrier for foreign investors in investing in Korean stock markets. Moreover, this kind of registration requirement for foreign investors is not being implemented in major advanced economies such as the U.S. and Japan. Thus, from the perspective of making Korean regulations more consistent with global standards, global investors have made continuous calls for the need to change this rule. Introduced in 1992 to manage foreign investors maximum investment limit, the foreign investor registration system has been in place for the past three decades without much change despite the fact that the foreigners investment limit was abolished in 1998 in principle, leaving only 33 items under the authorities watch for foreigners total holding limit and two items for foreign individual holding limit out of some 2,500 listed companies currently. Once the revised Enforcement Decree of the FSCMA takes effect, foreign investors will be able to open investment accounts at securities firms without having to go through a prior
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May 31, 2023
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May 30, 2023
- Authorities Plan to Overhaul Rules on CFD Trades while Restricting New Transactions for Three Months
- The Financial Services Commission held a meeting with the Financial Supervisory Service, the Korea Exchange and the Korea Financial Investment Association on May 26 and held discussions to finalize a set of measures intended to strengthen regulations on trading of contracts for difference (CFDs). The measures include (a) enhancing transparency in the provision of information on the actual type of CFD investors and investment balances by item, (b) closing loopholes to prevent regulatory arbitrage by including the amount of CFDs provided in the securities firms maximum credit extension limit, (c) requiring individual investors applying for the qualified professional investor status to go through an in-person (including video call) verification process, and (d) establishing a new investment requirement for over-the-counter (OTC) derivatives transactions such as trading of CFDs. Enhancing transparency in provision of relevant investment information To help investors make more rational decisions about their CFD investments, authorities will improve the system to ensure the provision of more appropriate investment information. Even though those making investments in CFDs are mostly individual retail investors (making up about 96.5 percent), currently, when securities firms submit stock transaction orders following retail investors CFD trading, the investor type is currently marked as institutional investor when orders are submitted by a domestic securities firm or as foreign investor when orders are submitted by a foreign securities firm. This has created the problem of misrepresenting the flow of investment funds into particular investment items by institutional and foreign investors. In order to prevent this sort of misunderstanding by market participants, for stock transactions resulting from CFD trading, actual investor type (e.g., individual investor) will be recorded. In addition, as in the case of credit loans, the total and item-by-item CFD balances will be disclo
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May 08, 2023
- FSC Introduces Measures to Facilitate Corporate Merger and Acquisition Activities
- The FSC announced a set of measures aimed at facilitating corporate merger and acquisition activities on May 8. In the second half of this year, the FSC also plans to announce additional policy agenda items for facilitating corporate MA activities through coordination with the Ministry of Justice. Corporate MAs are an important mechanism to boost management efficiency and reorganize the structure of an enterprise. They also help to increase the overall productivity of an economy as well as its recovery from a downturn. However, the corporate MA market saw a significant decline recently due mainly to the worsening of macroeconomic conditions. Against this backdrop, the FSC prepared plans to (a) seek regulatory improvements on corporate MAs, (b) strengthen support for corporate restructuring through MAs, (c) support strategic MA activities in line with industrial restructuring demand, and (d) make domestic rules on corporate MAs more congruent with global standards. Key Details Seek regulatory improvements on corporate MAs to propel growth momentum Authorities plan to make improvements to some of the regulations that have been identified as unreasonable including those on public tender offer, corporate mergers and credit offering by investment banks. First, when making a public takeover bid, the burden of securing funds beforehand will be eased. A loan commitment from a trustworthy acquiring financial institution or an investment agreement from a limited partner will be recognized as an admissible document showing financial capability of a tender offeror. Second, in a spin-off or a post-spin-off merger, the process of converting CBs (convertible bonds) and BWs (bonds with warrants) will be streamlined as the electronic securities depository (Korea Securities Depository) will be allowed to get investor information directly from securities firms and process conversion of CBs and BWs electronically. Third, investment banks will be able to more actively offer credit to bu
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Apr 26, 2023
- Revised Rule to Require IPO Bookrunners to Check Payment Capability of Institutional Investors
- The FSC approved a revision bill of the regulation on financial investment businesses at its 8th regular meeting held on April 26. This revision bill is a follow-up to the measures to improve the soundness of the initial public offering (IPO) market announced in December last year and contains a measure to facilitate carbon emissions trading by securities companies along with other regulatory overhaul items. Requirement for IPO bookrunners First, when managing IPOs, the IPO bookrunner will be responsible for verifying institutional investors ability to pay for stocks before the allotment of shares takes place. In an IPO, the bookrunner performs a book building to check demands from institutional investors in order to determine an appropriate IPO price. The public offering price decided is then used to get subscription from retail investors. However, for certain high-demand items, the issue of fictitious subscription by institutional investors in excess of their payment capabilities and that of over-competition have been problematic. It has been pointed out that this practice of fictitious subscription has been hindering the price discovery function of the book building process, causing distortions in the IPO market. Thus, this revision is aimed at preventing the practice of fictitious subscription and strengthening the responsibility of IPO bookrunners throughout the book building process by introducing sanctions such as imposition of an administrative fine for unfair transaction activity when bookrunners fail to check institutional investors stock payment capabilities prior to allotting shares. This requirement will take effect from the securities registration reports for IPOs filed after July, after relevant rules change is completed by the industry association. With this revision bill, apart from the measures for allowing bookrunners to preliminarily review institutional investors demands and introducing the cornerstone investing system, all other follow-up items
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Apr 03, 2023
