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Mar 30, 2021
- Authorities to Closely Monitor Illegal and Suspicious Activities Linked to Property Market Speculation
- Vice Chairman Doh Kyu-sang presided over the kick-off meeting of the special financial response team on March 30 as a part of the government-wide effort to root out speculation in the real estate market. The financial response team will be chaired by the Vice Chairman of the FSC and made up of about one hundred officials from the Korea Financial Intelligence Unit (KoFIU), Financial Supervisory Service, Korean Federation of Banks and Korea Credit Information Services. It will serve as a financial sector control tower in the governments efforts to prevent speculation in the real estate market. More specifically, the special financial response team will carry out inspections on lending practices, suspicious transactions and so on while also looking into areas for regulatory improvements. At the meeting, Vice Chairman Doh stated that controlling speculation in the property market remains one of the top priorities of the financial sector and laid out following agendas for the operation of the team. First, the authorities will carry out inspections on existing loans that are suspected to be linked to speculation and report immediately to the investigative authority upon finding any unlawful activities. Second, in close coordination with the real estate market monitoring agency that is soon to be established, the authorities will set up a monitoring system that targets particular regions and financial institutions with sudden hikes in suspected cases. Until then, the KoFIU will maintain close monitoring and share relevant information with the investigative authority. Third, there will be stringent penalties without exception when violations are found in the process of issuing land loans. Fourth, the authorities will work to improve the relevant rules on non-housing mortgage loans and include the measures in the household debt management plan that is expected to be announced in April. * Please refer to the attached PDF for details.
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Mar 30, 2021
- New Regulations on Stock Short Selling to Take Effect from April 6
- The government approved the revisions to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) during a cabinet meeting held on March 30. The amendments and the revised FSCMAwill take effect on April 6. (Penalty standards) The revised FSCMA created the imposition of penalty surcharges on illegal short sale activities. Specific amounts for monetary sanctions will be determined through comprehensive consideration of the total amount of short orders and profits gained from the illegal short sale activity. (Record keeping requirement on securities lending agreements) The revised FSCMA requires short sellers to keep their securities lending agreements for five years to be presented promptly to the relevant authorities upon request. As such, the Enforcement Decree will be revised to prescribe specific criteria to be maintained, including information on stock items, number of shares, transaction dates, counterparties, lending periods, fee rates, etc. It also requires the maintenance of transactions data stored in an electronic transaction processing platform or other format that is not susceptible for alteration. (Restriction on short sellers participation in capital increase) The revised FSCMA restricts short sellers from participating in a companys capital increase via issuing new shares once the company has made such a plan public, except in certain cases. As such, the Enforcement Decree will be revised to determine a specific time period wherein the short sellers participation in capital increase is restricted as well as specific cases for exception as specified below. If an investor has shorted a companys stocks during the restriction period, the investor cannot participate in the companys capital increase, except for the cases where the short selling is deemed to have no unjust effects on the issuing price as stated below. - Restriction Period: From one day after the disclosure of the companys capital increase plan until the dete
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Mar 30, 2021
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Mar 29, 2021
- FSC Chairman Vows Continued Support for SMEs
- FSC Chairman Eun Sung-soo visited the newly opened financial support center at the Korea Federation of SMEs on March 29 and held talks on the governments efforts in providing financial support to SMEs. The following is a summary of Chairman Euns remarks. The government has made various types of financial support available for SMEs and small merchants. It has abolished the joint and several liability by state-backed lending institutions and strengthened the provision of venture capital to promising SMEs and venture firms. To help with the COVID-19 crisis, maturity extensions and payment deferrals were made available from all financial sectors since April of last year. The recently announced six-month extension of maturity extension and payment deferral as well as the governments plan for a gradual normalization have taken into account various comments from SMEs and small merchants. As such, the authorities will work to ensure that these support measures are effectively implemented. For SMEs, there are growing concerns over deterioration in borrowing conditions, as their credit ratings will reflect last years decreased sales performance which may cause higher borrowing rates. To help mitigate these concerns, the authorities are in close consultation with the financial sectors. First, for SMEs undergoing a temporary hardship due to a worsening of business environment but are expected to bounce back soon after, their potential for recovery will be sufficiently taken into account when assessing their credit ratings. Second, for SMEs experiencing an unavoidable fall in credit rating, the authorities will work to minimize the impact on their maximum borrowing cap, interest rate, etc. Moreover, the government will work on measures to prepare for a post-pandemic economy. To help relieve the payment burdens after the expiration of maturity extension and payment deferral, consulting services will be provided to SMEs and small merchants to allow long-term installment payments b
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Mar 29, 2021
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Mar 25, 2021
- FSC to Closely Monitor Market Situations and Gradually Roll Back Crisis Response Measures
- Vice Chairman Doh Kyu-sang held the 37th financial risk assessment meeting via teleconference on March 25 and discussed the progress in the implementation of the COVID-19 financial support for small merchants and SMEs. The following is a summary of Vice Chairman Dohs remarks. (Pandemic Response Measures) In response to the COVID-19 pandemic, the government implemented a KRW175 trillion-plus emergency financial support package to provide support for small merchants and SMEs, stabilize financial markets and help businesses in key industries with liquidity shortages. Thanks to the active support shown by the financial institutions, markets quickly bounced back and financial difficulties experienced by small merchants and other vulnerable groups began to ease. On the Korean governments bold response to the crisis situation, the IMF in January this year released a positive assessment, and the OECDs recent growth forecast expects Korea to achieve a full recovery within this year. Bold and preemptive responses were effective given that the scale of policy response had to exceed market expectation at a time when extreme anxieties were spreading across markets. However, with signs of an economic recovery in the US, inflation expectations have been rising as well as the long-term bond yields. In this regard, the government will closely monitor market situations and work on preemptive management to prepare for a possible rate hike in domestic markets. In addition, there have been growing concerns about inappropriate trading activities in stock markets. There are active discussions going on in this regard at the National Assembly to strengthen penalties on unfair and inappropriate trading activities, such as price rigging. The government will closely cooperate with the relevant institutions to work on the prevention of inappropriate trading activities. (Maturity Extension Payment Deferral) Since April 1 of last year, all financial institutions made available maturity extensions
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Mar 24, 2021
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Mar 24, 2021
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Mar 18, 2021
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Mar 17, 2021
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Mar 16, 2021
- AML Requirements of Virtual Asset Service Providers to Take Effect from March 25
- The FSC announced that the revised rule that mandates AML duties on virtual asset service providers (VASPs) will go into effect on March 25, 2021, as the government approved the revised Enforcement Decree of the Act on Reporting and Using Specified Financial Transaction Information at a cabinet meeting held on March 16. Key Provisions I. Scope of VASPs Virtual asset service providers are virtual asset trading service providers, virtual asset safekeeping and administration service providers and virtual asset digital wallet service providers that are engaged in the purchase and sales, exchange and transfer, safekeeping and administration, intermediation and brokerage of virtual assets and virtual asset transactions. II. Business registration of VASPs VASPs are required to register their business with the Korea Financial Intelligence Unit (KoFIU) prior to the commencement of their business operation. Existing businesses that qualify as VASPs should register within six months (until September 24, 2021) or they will be subject to penalties. III. AML duties of VASPs Beginning on March 25, 2021, the registered VASPs will be subject to the anti-money laundering (AML) requirements, such as duties to verify identities of customers, file reports on suspicious transactions, etc. The authorities will carry out inspection and supervision on VASPs with regard to their compliance of AML requirements from the time of business registration. As the requirement to check and verify the identity of customers applies only to the registered businesses, consumers are advised to check the status of business registration and practice caution against VASPs requesting information about their resident registration numbers. * Please refer to the attached PDF for details.
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Mar 15, 2021
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Mar 11, 2021
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Mar 11, 2021
- FSC Announces Revisions to the Enforcement Decree of the FSCMA
- The FSC announced a revision proposal for the Enforcement Decree of the Financial Investment Services and Capital Markets Act on March 11. The revision proposal contains measures to bring improvements to the Chinese wall regulation,ease reporting duties on consignment, set standards on financial investment businesses credit extension to overseas branches and restrict investors from placing multiple orders for IPO subscription. The revision proposal will be put up for public notice until April 20 and will go into effect on May 20, 2021. Key Revisions I. Chinese Wall Regulation The revision proposal promotes more autonomy and accountability of financial investment businesses with respect to their internal management of Chinese wall policies. It specifies the types of information subject to the Chinese wall regulation, requirements for internal control standards, etc. In this regard, material nonpublic information and information on their clients asset management status will be subject to the Chinese Wall regulation. Financial investment businesses will be required to maintain specific internal control standards with respect to the prevention of information sharing, specific methods for information barriers, exemptions, etc. An independent board-level position should oversee the management of the internal control standards and the relevant information will be subject to disclosure. II. Consignment Rules The revised Act allows in principle financial investment businesses to consign their work to third-party agents except for duties pertaining to internal control. In this regard, the revised Enforcement Decree specifies internal control duties as duties related to compliance, internal audit and inspection, risk management and credit risk analysis evaluation. Their reporting duty on consignment to the FSC will also be changed from seven days prior to the consignment to within two weeks after the consignment. III. Credit Extension to Overseas Branches Financial investment
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Mar 11, 2021
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Mar 10, 2021
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Mar 10, 2021
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Mar 09, 2021
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Mar 09, 2021
- Government Approves Revision Bill to Strengthen Investor Protection with PEFs
- The government approved a revision bill to the Enforcement Decree of the Financial Investment Services and Capital Markets Act during a cabinet meeting held on March 9 with an aim to strengthen investor protection in the private equity fund (PEF) market. The revision bill is a follow-up to the measures to improve the regulatory framework on private equity funds announced on April 27, 2020and is scheduled go into effect immediately after promulgation in mid-March. Key Provisions I. Close Loopholes to Prevent Evasion of Tougher Regulations Currently, the number of investors for a private equity fund is limited to up to forty-nine.When a feeder fund invests in a master fund and the amount of that investment makes up ten percent or more of the master fund, the number of investors from feeder fund is counted toward the number of investors of the master fund. Under the current scheme, when a number of feeder funds makes investments of less than ten percent each toward a master fund, the master fund can be operated as a PEFand not as a publicly traded fundeven when the actual number of investors exceeds the regulated threshold of less than fifty. To address this problem, the revised bill adds another provision to the current scheme, which requires that when a number of feeder funds from a single PEF management firm invests in a master fund and their total investment amount makes up thirty percent or more of the master fund, the number of investors in the feeder funds will be counted toward the total number of investors of the master fund. II. Strengthen Regulations on Unfair and Inappropriate Sales Activities Cross investing or circular investing between PEFs managed by the same entity exposes the problem of artificially inflating the volume of trust or the possibility of dual compensations. In addition, recent PEF mis-selling cases revealed coercive sales tactics in return for other monetary benefits, such as business investment or loan from the fund. The revision bill pr
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Mar 09, 2021
- Financial Authorities to Provide Continued Support and Prepare for Post-pandemic Economy
- Vice Chairman Doh Kyu-sang held the 36th financial risk assessment meeting via teleconference on March 9 and discussed the implementation of the COVID-19 financial support programs. The following is a summary of Vice Chairman Dohs remarks. (Financial Market Monitoring) With COVID-19 vaccines and a large-scale stimulus plan in the US, positive outlooks for economic recovery are spreading. However, expected inflation and interest rate hikes in overseas markets require close market monitoring as they may place cost burdens on domestic companies and households financing needs. As such, the authorities will closely monitor risks and prepare appropriate response when necessary. (COVID-19 Financial Support) Last week, financial institutions agreed to extend the availability of maturity extension and payment deferral programs for small merchants and SMEs until the end of September 2021. State-backed financial institutions also plan to offer an extension of loans and guarantees for middle market enterprises until September this year. The low interest rate lending support for small merchants will also be available for one more year. In order to help businesses prepare for a post-pandemic era, the government will extend the application period of the key industry stabilization fund, which is currently set to expire at the end of April this year, and find ways to make use of the fund to help businesses prepare for a post-pandemic era. In addition, the government will continue to provide support through the corporate asset purchase program.This year, on-site consulting services will also be made available to help businesses with their financing needs. (Mortgage Loans) The government has introduced diverse measures to manage household debt and stabilize the housing market. Current homeowners purchasing another house with mortgage loans in regulated areas are required to move into new home and sell their current properties within a specified time frame. In this regard, the financia
