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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
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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
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Mar 16, 2023
- 3rd Working Group Meeting Held on Improving Management, Operating Practices of Banks and Banking System
- The FSC and the FSS held the 3rd working group meetingof the taskforce on improving the management and operating practices of banks and banking system on March 15, chaired by FSC Vice Chairman Kim So-young. Details of 3rd Working Group Meeting Discussions First, participants discussed policy direction for prudential regulations on banks to improve their loss absorbing capacity. Financial authorities introduced their plans to ensure that banks have sufficient loss absorbing capacity in preparation for future uncertainties by bolstering prudential regulations. In this regard, authorities will consider imposing countercyclical capital buffer (CCyB) to enhance banks overall capital adequacy ratio and introducing stress capital buffer depending on each banks risk management status and stress test result. In addition, authorities are currently working on revising the regulations on supervision of banking business, which will authorize financial authorities to request banks to set aside special reserves for loan loss and conduct a regular inspection every year on banks models for forecasting estimated loss and demand improvements if the results are deemed insufficient. Regarding these measures for enhancing banks loss absorbing capacity, participants said that it is necessary to consider appropriateness not only in the amount of capital buffers but also in the timing and the pace of implementation. First, participants said that improving the effectiveness of CCyB accords with the recent developments in capital requirements and research direction. If prudential regulation is tightened in the banking sector, however, it may cause a balloon effect in which potential risks move to the non-banking sector. In this regard, participants emphasized the need for a balanced approach, which considers the soundness of the nonbank sector as well. They also stated that it is necessary to keep close tabs on the real estate market, given similarities between the credit cycle and the real e
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Mar 08, 2023
- SFC Imposes Penalty Surcharge on Violation of Short Selling Regulation for First Time
- The Securities and Futures Commission (SFC), a sub-commission of the FSC responsible for the oversight of the securities and futures market, reached a decision on March 8 to impose penalty surcharges of KRW3.87 billion and KRW2.18 billion on company A and company B, respectively, for their naked short selling activities, which violate the regulations on short sales prescribed in Article 180(1) of the Financial Investment Services and Capital Markets Act (FSCMA). Previously, illegal short selling activities were handled with administrative fine or caution. This is the first instance where authorities are imposing penalty surcharge on entities who committed those activities. While closely cooperating with relevant institutions, authorities will continue to maintain effective market monitoring, detection and investigation system on violation of regulations against short sales, and continue to strictly penalize illegal activities. Summary of Violation and Details of Discussion a) Company A had recorded on its internal system some amount of ◇◇◇ stocks that are expected to be issued through a capital increase without consideration before they are actually issued, in order to assess the value of its funds. Then, perceiving the stock as those can be sold, the company submitted sell orders on 210,744 ordinary shares (KRW25.14 billion) of ◇◇◇, which the fund had no ownership of, within a certain period in 2021. This was in violation of the regulation that prohibits naked short selling. b) Company B had erroneously entered the information of the borrowed △△▽ stocks, the name of which is similar to that of △△△ stocks, into its balance management system. Then, based on this overstated balance, the company submitted sell orders on 27,374 ordinary shares (KRW7.329 billion) of △△▽ stocks (which the company actually had no ownership of) on a certain day in 2021. This was in violation of the regulation that prohibits naked short selling. As this is the f
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Mar 06, 2023
- FSC Holds Meeting to Review Corporate Bond and Money Market Situation and Real Estate PF Risks
- The FSC held a meeting with relevant authorities to review the corporate bond and short-term money market situation and risks in the real estate project finance (PF) market on March 6.At the meeting, authorities discussed (a) the current corporate bond and money market trends, (b) direction for addressing risks in the real estate PF market, (c) direction to revise the inter-creditor agreement in real estate PF, and (d) measures to support private sector-led real estate PF restructuring. Inspection Results on Corporate Bond and Money Market At todays meeting, participants assessed that the corporate bond and money markets are showing clear signs of recovering from the contraction seen in the second half of last year. Corporate bond spreads have narrowed since the end of November last year,and demands for issuing corporate bonds are being smoothly absorbed in the market as the volume of non-financial corporate bonds issued in last January and February surpassed the amount of bonds reaching maturity.In the money market, interest rates on commercial papers (CPs) have continued to declinedue to the turnaround in liquidity conditions, and those on PF-ABCPs (project finance asset backed commercial papers) also appear to be on decline, compared to the end of last year. However, it is necessary to watch over market situations with vigilance because interest rates on PF-ABCPs with rating of A2 or lower still remain high, and as the issuance of corporate debts with shorter term maturities is taking place more frequently. Meanwhile, there still remain high uncertainties around financial markets this year, as it is forecast that the U.S. will continue to maintain its current tightening stance for longer with the help of its strong economic indicators and the higher-than-expected price indices and the war between Russian and Ukraine and the friction between the U.S and China continue. Therefore, participants agreed to continuously monitor the volatility of corporate bond and mone
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Mar 03, 2023
- Interest Rate Disclosure to be Expanded in Banking Sector to Promote Competition
- Financial authorities announced a plan to expand banks disclosure of the differences between interest rates on deposits and loans at the 1st working group meeting of the taskforce on improving the management and operating practices of banks and banking system held on March 2. The following are specific measures of the plan. a) Along with the current comparative disclosure on the differences between interest rates on newly transacted deposits and loans across different banks, the banking sector will additionally provide comparative public disclosure on the differences between interest rates on outstanding balance of deposits and loans among different banks, which will show the profitability level of each bank. In addition, the banking sector will also provide information on detailed interest rate of loans (household loans, business loans, etc.) and deposits based on outstanding balances. b) Interest rates on jeonse loans, which are highly relevant to peoples daily life, offered by individual banks will be comparatively disclosed in order to facilitate clear comparison of interest rates on jeonse loans (interest rates on home mortgages and credit loans are currently being disclosed). c) The banking sector will comparatively disclose individual banks interest rates on household loans in a more detailed manner, which subdivide them into base rate, spread, and preferential rate, intended to help customers compare respective characteristics of banks interest rates calculation. d) Each bank will voluntarily add a new webpage to put up explanations of the factors that bring about changes in their interest rates, such as expansion of loans to low- and mid- credit borrowers or increased ratio of short-term bank borrowings. Authorities plan to revise the detailed regulations on supervision of banking business and set up a computer network system between the Korea Federation of Banks and individual banks with a goal to begin implementation of these measures in July this year.
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Feb 28, 2023
- Fast-Track System to be Utilized Effectively in Investigation of Unfair Trading Activities
- The FSC, the FSS, the Korea Exchange and Seoul Southern District Prosecutors Office held a joint council meetingon February 27. At the meeting, authorities discussed and reviewed the outcome of operating the fast-track system in handling unfair trading activities in 2022. The fast-track system, introduced in 2013, is an emergency measure by Chair of the Securities and Futures Commission (SFC) in which a case deemed urgent and significant can be referred to the prosecutors office without going through the SFCs deliberation. If a case under investigation by the FSC or the FSS is deemed to have urgent need of the prosecutors investigation due to concerns about a suspect fleeing or a potential destruction of evidence, SFC Chair can decide to quickly refer the case to the prosecutors office after consulting with relevant authorities. In 2022, the FSC and the FSS referred a total of 20 casesto Seoul Southern District Prosecutors Office through the fast-track system, leading to prosecution of numerous offenders within short periods of time. In order to more effectively respond to unfair trading activities, which are becoming more sophisticated and organized, authorities will strengthen cooperation among related agencies and concentrate more investigative capacity on major cases that have a potential to inflict significant losses to investors. By utilizing the fast-track system, authorities will take swift and stern responses against major cases involving unfair trading activities, and make continuous efforts to improve the operation of the fast-track system. Major Fast-Tracked Cases in 2022 [Case #1] Case involving circulation of false information about COVID-19 test kit and sale of company stocks at high price for profiteering (Case Summary) The offenders (a) acquired a KOSDAQ-listed company (company A) through a leveraged buyout (LBO: MA without own capital), (b) then spread a rumorabout company As COVID-19 test kit to drastically push up its stock price,and (c) sold the
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Jan 31, 2023
- Authorities Plan to Improve Rules Regarding Dividend in Line with Global Standards
- The FSC and the Ministry of Justice announced measures to improve rules regarding dividend to make companies procedures for distributing dividends more consistent with international standards. First, by issuing an authoritative interpretation on the Commercial Act and revising the Financial Investment Services and Capital Markets Act (FSCMA), authorities will make improvements to the current procedure for distributing dividends to enable investors to invest after checking dividend amounts to receive. Second, authorities will pursue diverse measures to induce voluntary and active adoption of the improved dividend distribution procedure from companies by revising and notifying the model articles of incorporation for listed companies, requiring companies to disclose whether they have adopted the improved dividend distribution procedure on their corporate governance reports, etc. Authorities expect that these measures will help to alleviate factors contributing to the so-called Korea discount, promote dividend investing and bolster companies dividend payout ratios, and create an environment where more investors are encouraged to turn to long-term dividend investing for regular dividend income which will help to ease volatility in stock markets. Background Most companies in Korea designate shareholders who will receive dividends at the end of each year prior to determining dividend amounts at general shareholders meetings held in the following spring. As a result, investors invest in companies without knowing how much they will receive in dividends, and they have no choice but to accept the decision on dividends that will be made a few months later. These rules and practices, which discourage dividend investing of earning regular dividend income, remain inconsistent with global standardsand have been pointed out as a factor contributing to the so-called Korea discount, an undervaluation of the Korean stock market by foreign observers. Therefore, dividend investing in Kor
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Jan 26, 2023
- SFC Imposes Penalty Surcharge on Overseas-based Financial Investment Entity for Market Disturbance
- The Securities and Futures Commission (SFC), a sub-commission of the FSC responsible for the oversight of the securities and futures market, decided on January 26 to impose a penalty surcharge of KRW11.88 billion on an overseas-based financial investment business entity (securities firm A hereinafter) for disturbing market order with its high-frequency algorithmic trading activities. This is the first instance in Korea where authorities reached a decision to impose a penalty surcharge for market disturbance caused by high-frequency algorithmic trading activities.With the growth in the volume of high-frequency algorithmic transactions recently, financial authorities will continuously strengthen the administration of market risks associated with them. Overview The SFC recognized that securities firm A engaged in an activity of disturbing market order in its transactions of a total of 264 stock items in 6,796 trading periods via a Seoul-based securities firm (securities firm B) between October 2017 and May 2018, and decided to impose a penalty surcharge of KRW11.88 billion on securities firm A, pursuant to the Article 429-2 of the Financial Investment Services and Capital Markets Act (FSCMA). Violation Securities firm A engaged in trading activities using its algorithmic trading system, which enables it to acquire and analyze data on price quotation and trade executions as well as submit buy and sell orders via direct market access (DMA)more quickly than ordinary retail investors. In the process, securities firm A placed orders intensively and repetitively within a short period of time in the following pattern(a) placing immediate-or-cancel (IOC)buy market orders to exhaust all quantities of best ask prices in succession, and (b) submitting buy limit orders on any remaining unfilled quantity where there is no bid price given in order to newly generate the best bid price (inflating bid price) and then cancelling such transactions. Thus, a suspicion was raised that secur
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Jan 25, 2023
- FSC Announces Measures to Improve Foreign Investors' Access to Korean Capital Markets
- The FSC announced on January 25 a set of measures intended to improve foreign investors access to Korean capital markets by seeking bold improvements of the regulations that have been impediments to global investors investments in Korean markets. The measures include (a) abolishing the foreign investor registration requirement, (b) facilitating the use of omnibus account for foreign investors, (c) enabling more convenient OTC transactions by foreign investors and (d) expanding English disclosures in phases. Authorities expect that these measures will enhance the investment environment for foreigners on a par with international standards, which will provide important grounds to boost foreign investment in Korean markets. Background The foreign investor registration system and the constraints on foreign investors OTC (over-the-counter) transactions were introduced in 1992 when authorities began to allow foreign investors to invest in locally-listed stocks. While permitting foreigners to invest in locally-listed stocks, authorities established the total foreign investment cap and individual foreign investor cap of 10 percent and 3 percent, respectively, for each investment item, and began to require prior registration for foreign investors as well as to restrict their OTC transactions to monitor their observance. With the abolishment of foreign investors stock holding limit for ordinary companies in 1998, there currently exist foreign investors stock holding limits placed on only 33 items in key industries among 2,500 listed companies. However, the foreign investor registration system has continued to exist for the past three decades without a significant change. In addition, authorities introduced omnibus account for foreign investors in 2017 to provide a convenient way to invest in Korean markets, but it has not been utilized ever since its inception. The availability of English disclosures, which serve as essential information for foreign investors decisions on inve
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Jan 12, 2023
- Authorities Hold Meeting to Monitor Financial Market Situation and Discuss Stabilization Measures
- FSC Vice Chairman Kim So-young presided over a meeting with the Financial Supervisory Service and policy financial institutions on January 12 to check the corporate bond and CP (commercial paper) market situations and discuss the effects of market stabilization measures currently in place as well as the support plan for 2023. At todays meeting, participants shared a common assessment that the corporate bond and CP market conditions have been improving recently as interest rates on corporate bonds and CPs are continuing to decline, and in particular, as the level of purchase demand surpassed the volume of newly issued higher-grade corporate bonds and CPs.Also, in order to ensure that recent market movement toward stability can become sturdier, authorities agreed on the need to maintain active implementation of the market stabilization programs, and shared a common view on the need to boost the effectiveness of support on higher-grade corporate bonds and CPs and strengthen support for non-higher-grade corporate bonds and CPs, so that the movement toward stability can spread to non-higher-grade corporate bonds and CPs as well. The market stabilization programs introduced last year still have a total of KRW40 trillion or more in their support capacity, and thus, authorities will continue to actively put them into use going forward. a) The bond market stabilization fund currently has about KRW6.4 trillion in its remaining capacity (additional capital call of KRW9 trillion possible), and it will continue to reinforce market demand for higher-grade corporate bonds, while authorities consider an expansion of both the target and the size of purchase. b) The corporate bond and CP purchase program run by the Korea Development Bank (KDB) and Industrial Bank of Korea (IBK) currently has about KRW7.6 trillion in its remaining capacity, and it will continue to actively operate to purchase corporate bonds and CPs with a focus on non-higher-grade ones. c) The P-CBO (primary collater
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Jan 11, 2023
- Government Prepares KRW80 Trillion Financial Support Programs to Help SMEs Overcome Crisis
- The FSC and the Ministry of SMEs and Startups (MSS) held talks with policy financial institutions, the Korea Federation of Banks and major industry groups representing SMEson January 11 and announced their joint plans to provide financial support for SMEs to help them overcome the complex crisis situation they face currently. A total of KRW80 trillion of policy financial supports (KRW50 trillion from the FSC and KRW30 trillion from the MSS) will be newly supplied. This KRW80 trillion financial supports are designed to help them overcome the current triple-highs (interest rate, inflation and USD to KRW exchange rate) risky situation, to support growth of innovative businesses and to assist the recovery or re-start of vulnerable firms. After the announcement, the FSC and the MSS listened to complaints and suggestions from field industry groups for SMEs. Financial Support for SMEs (KRW80 Trillion) I. Background High interest rates and concerns about a global recession rapidly increase managerial burdens on SMEs, and this condition is expected to continue for some time in the near future. With the increase in loan balances, SMEs face added burdens for interest expenses due to rate hikes, and there are more SMEs struggling with increased production costs following rising in raw materials prices and global supply chain reshuffles. To improve the potential growth in our economy, SMEs need to get into the new growth sectors and secure their own competitiveness through business conversion. However, with the challenging economic situation recently, it is necessary to support the growth of innovative businesses and the resurgence or re-start efforts of vulnerable SMEs through policy finance. II. Overall Direction The government will supply a total of KRW80 trillion via policy funds (KRW50 trillion from the FSC and KRW30 trillion from the MSS) and seek system improvements in diverse areas to bolster the crisis-response capacity and growth potential of SMEs, and to expedite norm
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Dec 26, 2022
- FSC Plans to Bolster Support to Promote Sustained Growth of Fintech Businesses
- The FSC announced a set of measures to strengthen support for fintech businesses, which is confirmed after discussion and deliberation at the 5th financial regulatory innovation committee meeting held on December 20. Against the backdrop of the current industrial situation where fintech businesses face funding shortages amid interest rate hikes, waning impetus of industrial growth and difficulties in expanding their business into overseas markets, these measures will expectedly boost multiple facets of fintech business supports, such as funding or promotion of startups. Key Measures I. Strengthen Support through Investment and Policy Funds a) (Increasing the Size of Fintech Innovation Fund) The size of the fintech innovation fund, initially planned as KRW500 billion for four years (2020-2023), will be increased to KRW1 trillion by adding KRW500 billion for another four years (2024-2027). Authorities will improve operation methods by (a) ensuring continuous operation of the early-stage fintech investment fund, which has been operated intermittently, and (b) newly creating a commercialization fund intended to make investment in those who seriously prepare business expansion at the commercialization stage. b) (Increasing Support through Policy Financial Institutions) Tailored support for fintech businesses will be made in the form of loans and guarantees from policy financial institutions in the amount of at least KRW200 billion a year. c) (Establishing Comprehensive Fintech Support System) Authorities will set up and operate Fintech Support Council, consisting of representatives form 14 institutionsthat currently operate their own fintech support programs, to make their support programs more systematic and effective. The participating institutions will establish a common databaseto monitor the growth history as well as the record of support provided for each fintech business. A fintech focused investor relations (IR) event will be held at least once every half a year.
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Dec 19, 2022
- FSC Unveils Measures to Improve the Soundness of IPO Market
- The FSC unveiled measures to bolster the soundness of the initial public offering (IPO) market. The key measures include (a) allowing bookrunners to test the waters through demand survey to determine an appropriate price band of an IPO, (b) making bookrunners check institutional investors abilities to pay for stocks under their responsibility and, after that, accept subscriptions and carry out allotment of shares, and (c) increasing the limit range of the quotation price on the day of IPO to promote formation of an equilibrium price early on. Background An initial public offering (IPO) is a gateway for unlisted firms going public as well as an essential mechanism in capital markets. In this regard, it is important to make sure that price discovery function in public offering markets works properly and enables investors to make stable investments at fair value. Although the recent IPO market boom has somewhat subsided, the following behaviors that threaten a sound order in the market still exist. First, it can be challenging to determine the right price band for an IPO because assessing how market demand will change as an IPO price shifts remains difficult. Second, at the subscription stage, investors subscribe in shares which far exceed the actual demand to secure the portion of shares they hope to get allocated. Such actions set up a vicious cycle where investors fictitiously oversubscribe, resulting in excessive competition, which in turn leads to oversubscription. Third, after going public, there are worries about harm to investors from the phenomenon where stock quotation prices immediately reach the upper limit price on the first day or on the first and second days of an IPO, causing a situation of de facto transaction halt, and then collapse. Against this backdrop, in order to ensure that the IPO market can serve its original goal of helping unlisted firms entry into public offering markets and to promote the development of the IPO market based on more fairnes
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Dec 01, 2022
- Authorities Plan to Disclose Identity of Entities Committing Unfair Trading Practices
- As a way to bolster prevention of unfair trading practices in capital markets, the FSC plans to disclose the identity (corporate name, etc.) of those who violate capital market regulations such as restriction of short sales and prohibition of market disturbances and receive a disposition of a penalty surcharge or an administrative fine for that violation. This measure shall apply to the violators receiving sanctions at the 22nd regular meeting of the Securities and Futures Commission (SFC) scheduled to be held in December 2022. Their identities will be announced through the FSC website in February 2023. Background The FSC has gradually extended the scope and detailsstock items, dates and penaltiesof disclosure of the SFC resolutions on sanctions that are made available for unfair trading practices in capital markets. However, the identity of violators is not being disclosed currently due to the potential misuse of their corporate or individual financial transaction information by a third party. Nonetheless, there is a growing need to secure effectiveness of sanctions measures imposed on unfair trading activities in capital markets such as illegal short sales. Therefore, after a careful consideration, the FSC decided to expand the scope and details of disclosure of sanctions by unveiling the identity of violators. Disclosure of Identity of Entities Violating Capital Market Regulations If an investigation led by financial authorities ends up with sanctionsof imposing a penalty surcharge or an administrative fine, the identity (corporate name, etc.) of the violator will be unveiled. Although the violators that become subject to sanctions are mostly corporate entities, in some cases, individuals also become subject to sanctions when they commit unfair trading practices such as activities of disturbing market order. If unfair trading activities in capital markets under the investigation led by financial authorities are subject to criminal punishment,in consideration of t
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Nov 29, 2022
- Taskforce on Improving Internal Control of Financial Companies Announces Interim Results
- The taskforce on improving rules regarding financial companies internal control announced its interim discussion results on November 29. The key discussion details focus on strengthening the role and responsibility of chief executives, boards of directors and executive officers over their companies internal control affairs to boost the effectiveness of internal control mechanisms. Background Pursuant to the requirement for internal control standards and procedures (Article 24-1) prescribed under the Act on Corporate Governance of Financial Companies, all financial companies are currently operating their own internal control mechanism to prevent illegal activities committed by their executive officers or employees and the like. It is aimed at avoiding the risk of potential loss in the future and erosion of a companys reputation related to the soundness of company management and consumer protection. Since its introduction, there is an increased level of awareness throughout financial sectors about the significance of internal control. However, in reality, as setup and operation of an internal control system requires considerable efforts and costs, different companies have different levels of internal control standards and procedures, which vary significantly depending on the business strategy and willingness of the management. The more a company focuses on short-term performances, the more its internal control will remain perfunctory, which will probably prove inadequate in its function and effectiveness for the operation in the field. In particular, the successive occurrence of a number of financial accidents such as incomplete sales of financial products and large-scale embezzlement recently has raised the awareness and concerns about internal control of financial companies. Apart from inflicting losses to consumers and shareholders, financial accidents can have a significant impact on the overall health of the economy and society with a degradation of trust in fina
