Press Releases - Financial Services Commission

Press Releases

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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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Nov 23, 2023

Authorities Decide to Extend the Period of Operating Market Stabilization Programs and Eased Regulations

Vice Chairman Kim So-young of the Financial Services Commission presided over a meeting with officials from the Financial Supervisory Service, Korea Development Bank, Korea Credit Guarantee Fund and other market experts on November 23 to check condition of the current bond and short-term money markets and discuss plans for various market stabilization programs and eased regulatory measures. Market stabilization programs At the meeting, the authorities decided to extend the period of operating the bond market and short-term money market stabilization programs, which began to operate since last year. Although the demand for these support programs this year has been considerably lower than the previous year, the authorities decided to extend the period of operation for one year for the programs that are set to expire soon. As such, the operation of the bond market stabilization fund and the corporate bond and CP (commercial paper) purchase program will be extended until the end of December 2024, and the availability of the PF-ABCP purchase program for PF-ABCPs issued by securities firms will be extended until the end of February 2025. The primary collateral bond obligation (P-CBO) support program run by the Korea Credit Guarantee Fund and intended to support bond market stabilization will continue to operate as planned until the end of 2024. Eased regulatory measures The authorities also discussed extending the period of operating eased financial regulatory measures which are set to expire at the end of this year. Although the current liquidity and soundness indicators show that financial institutions are capable of maintaining regulatory ratios without the support form eased regulations, considering the possibility of abrupt changes in market situations, the authorities decided to extend the availability of eased regulations until the end of June 2024. The eased regulatory measures subject to the period extension include the following. a) Banks: Temporary easing of li
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Nov 20, 2023

FSC and FSS Meet with Financial Holding Companies

Chairman Kim Joo-hyun of the Financial Services Commission met with the heads of major financial holding companies along with Governor Lee Bok-hyun of the Financial Supervisory Service on November 20 and held talks on ways to help reduce the interest payment burden of small businesses and the self-employed. In his opening remarks, Chairman Kim talked about the challenges facing small businesses due to the abruptly increased interest payment burden within a short period of time. Due to high interest rates, Chairman Kim pointed out that financial institutions have been able to make high interest profits at levels unseen in the past, and that this means heavier payment burden on borrowers. Given this situation, Chairman Kim urged financial holding companies to come up with ways to help reduce the heightened burden of interest payments in the post-pandemic period inasmuch as their prudential management capacity allows. The eight major financial holding companies and the Korea Federation of Banks attending the meeting today decided to collectively expand their social responsibility by actively looking into ways to reduce the interest burden of small businesses and the self-employed. The financial holding companies and the banking sector are expected to engage in further discussions to come up with a specific support plan for announcement within this year. Beginning with todays meeting, the FSC and the FSS plan to hold subsequent meetings with each individual financial sector, such as the banking, financial investment and insurance sectors, to foster mutual understanding and engagement on a continuing basis. * Please refer to the attached file for details.
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Nov 16, 2023

Authorities Discuss Stock Short Sale Reform Measures

Vice Chairman Kim So-young of the Financial Services Commission attended a meeting on short selling reform measures which brought together authorities from the private sector, the ruling party of the National Assembly and the government on November 16. At the meeting, the authorities discussed a direction for making improvements to the short selling system. The reform measures discussed at todays meeting are not finalized measures for implementation but a set of proposals laying out a direction for further discussions and refinement at the National Assembly and with the public. Overall, the proposed measures are aimed at (a) leveling the playing field between institutional and retail investors, (b) preventing naked short sales in advance, (c) strengthening the detection and punishment of illegal short selling activities, and (d) expanding short sale disclosure. Stock Short Sale Reform Proposal I. Leveling the playing field Currently, the stock borrowing conditions for short selling remain unequal between institutional investors and retail investors, although the gap has been narrowed considerably through past reform measures for retail investors, extending the stock repayment period from 60 days previously to 90 days and lowering the margin requirement from 140 percent previously to 120 percent. However, the discrepancies in stock lending still exist and this has been raised as a problem of unleveled playing field for retail investors vis--vis institutional investors. As a way to resolve this problem, the authorities propose making the stock repayment period and margin requirement same for both institutional investors and retail investors. More specifically, first, the stock repayment period for institutional investorscurrently unrestricted and determined on a contract-by-contract basiswill be set as 90 days, same as that for retail investors. The Korea Securities Depository, which handles stock lending to institutional investors, should check the repayment period o
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Nov 08, 2023

Government and Related Authorities Hold Meeting on Household Debt Situation

The Financial Services Commission held a meeting with officials from the relevant government ministries and organizations on November 8 and discussed the current household debt situation and various measures to ensure effective management. Regarding the October household loans data announced earlier today, the participants had a positive assessment about the slowing trend of mortgage loans, despite an overall increase in the size of household loans from the previous month. To continue to ensure a stable management of household loans, the authorities agreed on the need to strengthen relevant measures as follows. First, the authorities will bolster rules on debt service ratio (DSR) by closely reviewing the areas that are currently being exempted from DSR regulation and look into ways to gradually expand the application of DSR rule. The stressed DSR limit that is currently being reviewed for application on variable interest rate loans is expected to be announced in December this year with specific details. Second, the authorities will come up with stronger incentive structures that can reward banks to more actively and voluntarily introduce long-term, fixed interest rate mortgage loans by overhauling a relevant administrative guidance. The authorities will also seek to provide more incentives for covered bonds, which serve as a mechanism for banks to fund long-term, fixed rate loans. Third, the authorities will continue to keep close tabs on the trends of household loan growth across all financial sectors. Fourth, the authorities will work with financial sectors to come up with various ways to help reduce the burden of repayment and high interest rate for borrowers, for instance, by offering a temporary exemption from early repayment charges. At the meeting, FSC Secretary General Lee Se-hoon said that as it is difficult to achieve short-term results when it comes to containing household debt, the government will make efforts with a long-term perspective to build an inc
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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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Sep 25, 2023

Policy Funds to Supply Venture Capital in Strategic Areas

The Financial Services Commission held the 4th consultative body meeting on policy finance support with the related government ministries, policy financial institutions and a young entrepreneurs foundation on September 25. The consultative body on policy finance support was created last year to ensure more close alignment between the governments industrial strategies and supply of policy funds. In the five key strategic areas, the authorities last year pledged to supply a total of KRW91 trillion in policy funds support for 2023. As of August 2023, policy financial institutions have supplied a total of KRW73.8 trillion of policy funds support in the five key strategic sectors, achieving 80.4 percent of the annual supply target and surpassing the initial supply plan of 66.7 percent by the month of August. Along with concerns about an economic slowdown emanating from China, FSC Vice Chairman Kim So-young said that it is possible that interest rates and oil prices may continue to stay high for a while. Thus, in close coordination with relevant ministries, Vice Chairman Kim said that the authorities will work to ensure effective supply of policy funds to businesses to prevent funding shortages. To help ensure a continuous supply of policy finance support in each industry, the authorities discussed ways to more closely implement various industrial policy programs overseen by relevant government ministries with appropriate budget planning. In this regard, Vice Chairman Kim said that in order to provide policy finance support to various industrial sectors on a continuing basis, it is crucial to have a closer linkage between the supply of policy finance and fiscal planning. The authorities also discussed ways to overhaul the operation of Growth Ladder Fund, a fund dedicated for SMEs and venture businesses whose 10-year investment period has ended in August. The new Growth Ladder Fund will focus on investing in underfunded areas such as deep tech and climate sectors where the
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Sep 05, 2023

Rules Change Proposed to Officially Introduce BCBS Large Exposure Limit on Banks

The Financial Services Commission proposed revisions to a set of rules on banks and financial holding companies on September 5, introducing the large exposure limit recommended by the Basel Committee on Banking Supervision (BCBS) to help improve regulatory consistency with global standards and boost management over large-scale concentration risks. In 2014, the BCBS set out the supervisory framework for measuring and controlling large exposures and recommended its members to begin implementing the large exposure limit by January 2019. In Korea, the large exposure limit has been implemented through an administrative guidance since March 2019. However, a formal process to make this rule into an official regulatory framework has been postponed due to the coronavirus situation. BCBSs large exposure limit is currently adopted by sixteen countries including the U.S and the EU, and within this year, a regulatory consistency assessment program is expected to take place in Korea. In this regard, the revision proposal for the rules on banks and financial holding companies being announced for public comment today is similar to the banks and financial holding companies credit extension limit being observed under the current law in that it requires banks and financial holding companies to keep large exposures to a counterparty (or a group of affiliated counterparties) within 25 percent of their core capital (20 percent for D-SIBs). However, the revision proposal adopts a broader term for counterparties as it includes entities in both controlling relationship and economically dependent relationship. The revision proposal also incorporates a wider scope of credit exposures as it includes both credit extensions such as loans and financial products such as stocks and bonds as well as third-party guarantees. Thus, the revised rules will allow a more comprehensive and integrated way of managing counterparty credit risks. The authorities will grant a two-year grace period to the Korea D
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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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Jul 27, 2023

Authorities Propose Measures to Improve Special Listing Procedures for High-tech Companies

The Financial Services Commission held a meeting with the relevant government ministries and private sector entities on July 27 and unveiled a plan to improve the special listing procedures for technology companies. The plan includes 14 specific reform items from the stage of listing application to listing review to post-listing management. First, in the listing application stage, a new super gap tech listing track will be created for high-tech and strategically critical technology companies, for instance in deep tech or deep science sectors. Among them, businesses that are market-tested for their growth potential will be allowed to have a tech assessment conducted only by a single entity. They need to be designated as national strategic technology companies or national advanced strategic technology companies as prescribed by the relevant laws, have market capitalization of KRW100 billion or more and have received investment of KRW10 billion or more in the past five years. In addition, a business eligible to apply for the super gap tech listing track will be allowed to seek a special tech listing track even when its largest investor is a middle market enterprise, considering wide adoption of open innovation business models based on collaboration between an SME and a middle market enterprise. However, the size of investment by a middle market enterprise will be limited to less than fifty percent to prevent potential problems regarding the ownership of the company. Also, the complex structure of the current special tech listing track will be made simpler and more reasonable. For instance, businesses with technological prowess will be able to apply through innovative technology track, while those with distinctive business models can apply through business model track. Second, in the listing review stage, a fast-track review process will be granted to those that have been turned down previously for reasons other than their technology or business viability. In this case,
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Jul 20, 2023

KoFIU Announces Measures to Strengthen Responsibility and Professional Capacity in AML Duties

The Korea Financial Intelligence Unit (KoFIU) held a meeting with financial industry groups on July 20 and introduced measures to strengthen responsibility and professional capacity in financial institutions anti-money laundering (AML) duties. The measures have been prepared after having numerous discussions and gathering comments from financial institutions throughout the first half of this year. First, the proposed measures make the role and responsibility of core AML officers (board of directors, chief executive officer, compliance officer and reporting officer) more reasonable to ensure that their AML duties are performed effectively commensurate with their respective position and responsibility. The role of CEOs has been made more specific to clearly indicate what types of activities constitute the establishment and operation of a company-wide AML system. Under the current legal framework, there is no specific indication about the role and responsibility of compliance officers regarding their AML activities. Therefore, the measures introduce a supervisory role on compliance officers over their employees. The measures also adjust the reporting officers scope of responsibilities more realistically so that they can be made accountable for the areas that can actually come under their supervision. Second, the proposed measures strengthen the professional capacity and independence of the reporting officer who is in charge of overseeing the companys AML activities. Financial institutions will need to appoint someone who has at least two years of AML experience. However, considering that there is currently a shortage of AML experts in the market vis--vis the number of financial institutions that are required to comply with AML duties, this requirement will apply only to the financial institutions that are legally bound to have a compliance officer as mandated by the Act on Corporate Governance of Financial Companies (the Act hereinafter). A grace period of two years an
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Jun 27, 2023

Campaign to Return KRW12.4 Trillion in Unclaimed Insurance Money to Begin in September

The Financial Services Commission along with the insurance industry returned about KRW3.9 trillion in unclaimed insurance money to their policyholders in 2022 and plan to send out postal mail in September to inform relevant policyholders about KRW12.4 trillion in unclaimed insurance money still remaining. This campaign to return unclaimed insurance money has been in place since 2017 and over the past five years more than KRW16.8 trillion worth of dormant insurance money has been returned to the policyholders (KRW3.85 trillion in 2022). Meanwhile, the FSC, the insurance sector and the Korea Inclusive Finance Agency (KINFA) plan to shorten the period for transferring dormant insurance money to KINFA by about one year starting from 2024. Insurance companies transfer dormant insurance money to KINFA pursuant to the Microfinance Support Act as a form of contribution. Therefore, for insurance companies, the period to make this transfer of dormant insurance money occurring within this year will be reduced from February the year after next year (2025) to May (expected) next year (2024). Once transferred to KINFA, dormant insurance money can be traced and retrieved along with other types of dormant financial assets on KINFAs mobile app or website. * Please refer to the attached file for details.
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Jun 19, 2023

FSC Concludes Series of Meetings on Promoting Overseas Expansion of Korean Financial Businesses

The Financial Services Commission held a meeting with the Financial Supervisory Service, relevant industry groups and financial institutions on June 19 and had discussions on ways to promote overseas expansion of domestic financial businesses and seek regulatory overhaul. Since launching a taskforce on the globalization of financial industry in March this year, authorities held a series of seminars and meetings with different sectors and todays meeting is the final session concluding what have been discussed thus far. At the beginning of the meeting, FSC Vice Chairman Kim So-young delivered opening remarks and outlined the FSCs plan to improve regulations in the following four areas(a) acquisition of a foreign subsidiary to bolster global competitiveness, (b) raising funds for an overseas subsidiary by the parent company, (c) flexible application of domestic use only regulations on overseas branches, and (d) removing excessive redundancy in disclosure and reporting duties and switching the current ex ante reporting requirement to ex post reporting The FSC plans to draw up and announce in July specific regulatory reform measures in support for domestic financial companies business expansion overseas. To help resolve the difficulty of financial companies in getting in touch with local financial regulatory agencies abroad and to address the shortage of information available on foreign markets, authorities also introduced measures to strengthen cooperation networks with relevant authorities for overseas expansion of domestic financial businesses. * Please refer to the attached filefor details.
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Jun 08, 2023

Authorities Hold 1st Meeting on Benchmark Rate and Short-term Money Market

The Financial Services Commission held a meeting with the Bank of Korea, the Financial Supervisory Service and relevant industry groups and institutions to monitor how domestic financial institutions are preparing for a transition away from LIBOR (London interbank offered rate) and discuss issues surrounding the operation of domestic financial benchmark rates. In coordination with relevant institutions and financial companies, the government has been working to make a transition away from LIBOR, responding to the European Unions Benchmark Regulation (BMR) compliance and participating in the global benchmark rate reform efforts. The following is an overview of these efforts so far. First, all financial contracts based on non-USD LIBOR, which ceased to be published in 2022, were successfully converted, and financial contracts based on LIBOR, which will be discontinued from July 2023, are being converted to an alternative rate such as secured overnight financing rate (SOFR). As of the end of May 2023, about 95.3 percent of domestic financial institutions contracts have made this transition. Second, the government enacted the Act on the Management of Financial Benchmarks, which became effective in November 2020 and reflects international standards on benchmark rate reform, to strengthen credibility of domestic benchmark rates. In order to ensure a seamless utilization of domestic benchmark rates (Korea overnight financing repo rate and certificate of deposit rate) in the European Union, authorities have been working with EU counterparts to get an approval for congruity. Third, in February 2021, authorities selected the Korea Overnight Financing Repo Rate (KOFR) as Koreas new risk-free reference rate (RFR) and designated it as a critical benchmark rate under the Act on the Management of Financial Benchmarks. The KOFR is being published by the Korea Securities Depository (KSD) since November 2021. Currently, three-month KOFR futures and exchange traded funds (ETFs) have b
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Jun 01, 2023

FSC Holds Meeting to Monitor Progress of Real Estate PF Market Normalization

The Financial Services Commission held a meeting on June 1 to monitor progress in the normalization of the real estate project finance (PF) market along with officials from the Financial Supervisory Service, Creditors Coordination Committee, major financial holding groups and relevant policy financial institutions. As of the end of May 2023, a total of 30 real estate development projects have become subject to the assistance of the real estate PF lending institutions consortium agreement. Among them, business normalization is under way for 19 projects through provision of rollback on acceleration clause, new funds, deferment of interest payments and maturity extension. At the meeting, officials also went over the status of the support programs already announced and being provided by policy financial institutions such as business guarantees and policy finance support being offered by the Korea Housing Urban Guarantee Corporation (HUG) and Korea Housing Finance Corporation (HF), as well as KRW1 trillion worth of funds managed by Korea Asset Management Corporation (KAMCO). To support a seamless transition from short-term bridge loans to PF loans, the government already announced its plan to provide business guarantees worth KRW15 trillion through HUG and HF until the end of this year. As of May 30, the policy financial institutions provided a total of KRW6.01 trillion (KRW3.34 trillion by HF and KRW2.67 trillion by HUG) in support of the normalization of real estate projects. In addition, the special guarantee program set up to help alleviate anxieties in refinancing PF-ABCPs (asset backed commercial papers) provided a total of about KRW1.211 trillion (KRW0.12 trillion by HF and KRW1.914 trillion by HUG). To help ease the liquidity burden of regional real estate PF sites outside the Seoul metropolitan area and small- and medium-sized construction firms, the Korea Development Bank (KDB), Industrial Bank of Korea (IBK) and Korea Credit Guarantee Fund (KODIT) plan to prov
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May 30, 2023

Online One-stop Loan Transfer System Available

The FSC announced that financial consumers will be able to make a switch from their existing credit loans to loans offering more favorable borrowing conditions using their smartphones without having to visit a branch office of financial institutions beginning on May 31. Establishing an online one-stop loan transfer system has been a key policy agenda of this administration to help alleviate peoples interest payment burdens and promote digital transformation in the financial sector and competition between banks. In this regard, the FSC has been closely working with the Financial Supervisory Service, the Korea Financial Telecommunications Clearings Institute, major financial companies and fintech businesses to launch an online one-stop loan transfer system. In particular, prior to its launch on May 31, authorities have closely looked into ways to improve user convenience and guarantee stability and security of the system. Beginning on May 31, consumers will be able to use their smartphone apps (MyData-enabled loan comparison platform app or major financial company apps) to search for loans offering better borrowing terms and make a switch from their existing credit loans issued by 53 financial institutions (19 banks, 18 savings banks, 7 credit card companies and 9 specialized credit finance businesses). The online one-stop loan transfer app service will be available during the banks operating hours from 9:00 am to 16:00 pm on business days. Consumers can use the loan transfer service for their existing credit loans of up to KRW1 billion issued by 53 financial companies. From the time of downloading a mobile app until completing the verification of result, the service usage time is estimated to be around fifteen minutes, which is significantly shorter than at least two business days it took for consumers to visit the branch office of two financial institutions previously. The loan conditions calculated for consumers will be based on the same lending standards (maximum
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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 25, 2023

Authorities Plan to Preemptively Respond to Real Estate PF Risks of Securities Firms

The Financial Services Commission and the Financial Supervisory Service announced measures to preemptively respond to risks for securities firms related to real estate project finance (PF). Based on the improved market conditions, the measures are aimed at minimizing risks related to securities firms exposure to PF and avoid a repeat of last years market disruption. Background In the second half of last year, a sharp rise in CP rates caused by short-term money market crunch made it difficult to refinance real estate PF-ABCPs backed by securities firms, and this has subsequently increased liquidity risk across the securities industry and spread more anxiety throughout financial markets. To stem further spread of market jitters, the financial authorities actively responded to the crisis. Along with the purchase of corporate bonds and CPs through the Korea Securities Finance Corporation and the Korea Development Bank, authorities provided KRW1.8 trillion in liquidity jointly with the securities industry to purchase PF-ABCPs and issued an administrative interpretation for securities firms to help reduce refinancing demand for PF-ABCPs. While real estate PF-related risks of securities firms have been kept at a manageable level with money market conditions being gradually stabilized, there still exist risk factors in the event of deteriorated market conditions. The delinquency rate of real estate PF loans by securities firmsis expected to continue to rise amid uncertainties over interest rate moves in global financial markets. The size of PF-ABCP guarantees remains similar to that at the end of last year. Against this backdrop, the FSC plans to take preemptive measures jointly with the securities industry to mitigate risks related to real estate PF and review how risk weights are applied when calculating securities firms net capital ratios (NCRs) to ensure their PF-related risks are properly managed in accordance with actual risks. Measures 1. Maturity Mismatch to be Addr
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Apr 20, 2023

FSC Chairman Speaks about Measures to Boost Support for Startups and Venture Businesses

The FSC and the Ministry of SMEs and Startups held a press briefing on their joint effort to boost support for startups and venture businesses on April 20. The following is a summary of FSC Chairman Kim Joo-hyuns opening remarks. FSC Chairmans Remarks The measures to support startups and venture businesses being announced today are focused on helping the industry escape the problem of death valley in terms of their financing needs, and the measures take into account opinions of key industry participants such as venture investors and startups. According to venture investors, the industry currently faces difficulties in attracting new investment due to liquidity shortage amid interest rate hikes and anxieties in financial markets. Also, the slowdown in IPO market activities has made it difficult for investors to collect their investments, which restricts opportunities for new investment. Against this backdrop, while reflecting the opinions and needs of the industry, the government has drawn up support measures that will help strengthen the role of policy financial institutions while having the private sector play the key role in this private-public joint effort. Support for venture investors First, to support venture capital to liquidate funds at maturity according to schedule to allow opportunities for new investment, authorities will set up a secondary fund worth KRW1 trillion through policy financial institutions this year. Second, to facilitate banks to provide more venture capital, the banks investment cap on venture funds will be raised from the current level of 0.5 percent of equity capital to 1% of equity capital. Third, additional funds will be injected to the KONEX scale-up fund to promote innovative startups to be listed on KONEX and enable them to make collection on investment. Support for startups First, to help ensure a continuous growth of early-stage startups that are not making any profits and deep tech startups for which it may take a long time befor
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Apr 06, 2023

Online Insurance Policy Comparison and Recommendation Service to be Piloted

The FSC introduced measures to allow platform service providers to test operate insurance policy comparison and recommendation service to help enhance consumer benefits and promote competition in the insurance sector. From as early as the end of this year, consumers will be able to compare various insurance policies offered by different insurance companies and receive recommendation on suitable products before signing up at an insurance companys online website of their choosing. Using the insurance policy comparison and recommendation platform service, consumers will be able to sign up for the types of insurance that are most widely used and closely linked to their everyday lives such as indemnity health insurance and auto insurance plans at a more affordable cost. A platform service provider refers to a non-financial company such as a MyData service provider or electronic financial business operator. Currently, the Insurance Business Act only permits employees of insurance companies, insurance agents and insurance planners to engage in solicitation activities. For a platform business to offer insurance policy comparison and recommendation service, it needs to be selected as an innovative financial service provider under the financial regulatory sandbox program. As the entry of platform businesses can have an enormous impact on the operation of insurance companies and insurance agents, with complex interest relationships among them, authorities set up a taskforce consisting of all relevant stakeholders and held meetings throughout between September 2022 and March 2023. Despite early-stage differences in opinions on the issue of whether to permit the availability of auto insurance and about the maximum level of commission, the taskforce participants reached a common ground on the ways to test operate platform services while minimizing the impact on traditional solicitation channels and concerns about anti-competition with consumer benefits placed at the top of priori
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