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Jun 14, 2013
- Revision to Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA)
- BACKGROUNDThe revised Financial Investment Services and Capital Markets Act (FSCMA) was promulgated in May 28, 2013, which includes vitalizing investment banking (IB) business, introducing alternative trading systems (ATSs), and amending the current regulatory framework of asset management businesses.In line with the revision to the FSCMA, the FSC plans to revise the Enforcement Decree of the FSCMA to stipulate specific terms on matters delegated by the Act and further improve the current capital markets system.KEY CONTENTS1. Stimulate investment banking (IB) business(Requirements to be registered as an IB) A securities firm will be required to hold equity capital worth KRW 3 trillion or more and have the mechanism of risk management and internal control.(Prime brokerage service) The scope of customers with whom IBs can provide prime brokerage service will be expanded to financial companies, pension funds, overseas hedge funds as well as Korea-based hedge funds stipulated in the revised Act.(Credit extension for companies) The Enforcement decree specifies the scope of credit extension that IBs can provide companies as loans, payment guarantee, and bill discount. It also details types of credit extension exempted from the rule which limits a total amount of credit extension by an IB not to exceed its equity capital.2. Improve capital market infrastructure(Introduction of ATS) To be registered as an ATS, a securities firm will be required to hold equity capital worth KRW 20 billion or more. The Enforcement Decree specifies types of products that can be traded through ATSs as stock certificates and depository receipts (DR).ATSs will be subject to the same rules applied to exchanges in regard with measures on market surveillance and market stabilization such as daily price limit or trading halt, while it will be granted greater autonomy and flexibility in regard with trading business.Securities firms, however, can execute customers’ orders as customers want if there w
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Jun 12, 2013
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May 31, 2013
- Basel III Capital Regulations to be Implemented from December 2013
- BACKGROUNDKorea has already finalized preparation of relevant rules for the implementation of Basel III. However, authorities postponed the initially scheduled date for implementation (Jan.1, 2013) considering the uncertainty of adoption status of other member countries and decided to adjust Basel III implementation schedule after closely monitoring the progress of other member countries.CURRENT TRENDAs of April, 23 among 27 Basel Committee on Banking Supervision member countries finalized the implementation schedule. Basel III implementation Schedule (as of April 30, 2013) Region Implementation Schedule Member Countries Asia Not finalized(2) Korea, Indonesia Finalized(7) Japan, Singapore, Hong Kong, China, India, Saudi Arabia, Australia Europe Not finalized(1) Turkey Finalized(11) Switzerland, Russia, EU(UK, France, Germany, Italy, Belgium, Netherlands, Luxemburg, Spain, Sweden) Americas, Africa Not finalized(1) USA Finalized(5) Canada, Mexico, South Africa, Brazil, Argentina IMPLEMENTATION OF BASEL IIIThe FSC, in close coordination with the MOSF, FSS, BOK, and other relevant authorities, came to a decision to implement Basel III on December 1, 2013. The decision was made as major Asian economies have already implemented Basel III capital regulations in 2013 and the banking industry requires time to prepare for the adoption.EXPECTED EFFECTSThe Basel III regulation to take effect this year will be limited to bank capital requirements. Since the capital of most domestic banks consists of common equity, the impact of Basel III capital regulations will not be significant unlike banks in the US and Europe.FUTURE PLANThe authorities will gather additional opinions on the revisions to the ‘Regulation on Supervision of Banking Institutions’ and ‘Enforcement Rules for Banking Supervision’ from May 31 to June 19, 2013. Final decision will be made by the FSC in June.Basel I, II, III Comparison Region Implementation Schedule Member Countries Asia Not finalized(2) Korea
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May 24, 2013
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May 21, 2013
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May 10, 2013
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Apr 18, 2013
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Apr 03, 2013
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Mar 25, 2013
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Mar 21, 2013
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Mar 08, 2013
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Mar 04, 2013
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Feb 28, 2013
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Feb 26, 2013
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Feb 12, 2013
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Jan 29, 2013
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Dec 21, 2012
- Implementation Plan for Basel III
- GLOBAL TRENDS IN BASEL III IMPLEMENTATIONOut of 27 BCBS members, 11 countries have published the final set of Base III regulations effective s from January 2013 as initially scheduled, while 15 members including 9 EU countries and Korea have issued draft regulations for Basel III implementation. Turkey will unveil draft regulations in early 2013. Implementation No. of countries Countries status Draft not yet 1 Turkey announced Draft announced 15 Korea, Indonesia, EU (UK, France, Germany, Italy, Belgium, Netherlands, Luxembourg, Spain, Sweden), Russia, Brazil, Argentina, USA Implementation 11 Japan, Singapore, Hong Kong, China, India, Saudi Arabia, Australia, plan finalized Switzerland, Canada, Mexico, South Africa The US already announced on November 9, 2012 that it would be difficult to implement BaselIII starting January 2013 as initially agreed. The EU has not yet reached an agreement to finalize the implementation plan for Basel III.With such global situations taken into account, the BCBS announced in its press release on December 14, 2012 that “it is expected that as remaining jurisdictions finalize their domestic regulations during 2013, they will incorporate all the remaining transitional deadlines in line with the original global agreement, even where they have not been able to meet the 1 January 2013 start date.”DOMESTIC IMPLEMENTATION PLANKorea has been preparing for Basel III implementation from early 2011 and now almost completed its preparatory work for implementing Basel III starting January 2013.1However, there is a need to reflect global trends in setting a timeline for domestic implementation of Basel III.Therefore, the FSC will set a specific timeline for domestic implementation after closely monitoring progress on Basel III implementation in other countries, while maintaining our basic principle to apply Basel III to domestic banks and bank holding companies.*Please read the attached file for details.
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Dec 12, 2012
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Dec 06, 2012
- First Annual Status Report on the Hedge Fund Industry
- RECENT TRENDThe total asset size of Korea’s hedge fund market has grown to KRW 1 trillion with 12 active management companies with 19 registered funds in a year since it started from KRW 149 billion with 9 fund management companies with 12 funds. (unit: KRW 1 billion) Dec 2011 Mar 2012 Jun 2012 Sept 2012 Nov 2012 total assets 2,370 5,509 6,546 7,858 10,175 (percentage*) (0.2%) (0.5%) (0.6%) (0.7%) (0.8%) no. of funds 12 17 19 20 19 (no. of mgmt (9) (11) (11) (12) (12) companies) * Percentage of asset size of hedge funds out of the total private equity industryHedge funds’ management strategy and investors have been diversified for the last year. Most of hedge funds still rely on long- short strategies; however, the industry plans to sell funds using a variety of strategies such as arbitrage trading and event-driven strategies.Investors’ pool is widening from prime brokers and affiliated companies with brokerage firms in the early stage to institutional investors and affluent retail investors.EVALUATIONThe hedge fund industry made a soft landing in Korea’s capital markets, dismissing initial concerns that the introduction of hedge funds might increase market risks. Hedge fund managers are building their reputation in the market with differentiated performance. As track records of funds with good performance build up, the size of assets under management for such funds is expected to increase.With improved market perceptions about hedge funds, investors’ pool is expected to be expanded to corporations and pension funds.POLICY DIRECTION AHEADIn order to attract capable managers, requirements for approving hedge fund management were relaxed as announced in July 2012. With the eased requirements, the approval process will be completed for asset managers that submit application in December by the end of this year.It is expected a total of 23 firms including 12 asset management companies, 5 brokerage firms and 6 advisory firms will submit application for hedge fun
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Nov 22, 2012