Press Releases - Financial Services Commission

Press Releases

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Dec 30, 2015

FSC Identifies D-SIBs for 2016

The FSC identified on December 30, 2015 four bank holding companies and one bank as domestic systemically important banks (D-SIBs) for 2016 : Hana Financial Group, Shinhan Financial Group, KB Financial Group, NH Financial Group and Woori Bank. Those identified as D-SIBS are to be required to set aside an additional capital of 1% if deemed needed, by 0.25% per year in the next four years from 2016 to 2019. * The average BIS ratio for banks and bank holding companies – 13.99% for banks and 13.68% for bank holding companies – at the end of September 2015 exceeds the minimum capital adequacy ratio ; therefore, there is no actual burden at present for the identified D-SIBs to set aside additional capital. The FSC will identify D-SIBs every year in accordance with assessment criteria proposed by the Basel Committee on Banking Supervision (BCBS). * Please read the attachedPDF for details.
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Dec 17, 2015

Amendments to the Regulation on Supervision of Banking Business and the Supervisory Regulation on Financial Holding Companies

The FSC approved on December 16, 2015 amendments to the Regulation on Supervision of Banking Business and the Supervisory Regulation on Financial Holding Companies. The amendments are intended to implement the Basel Committee recommendations such as domestic systematically important banks(D-SIBs) and countercyclical capital buffer and ease capital requirements for Internet-only banks in their early years. KEY AMENDMENTS 1. The FSC should select domestic systematically important banks (D-SIBs) considering their systemic importance to the financial system. Those identified as D-SIBs are to be required to set aside an additional capital of 1% if deemed necessary, by 0.25% per year in the next four years from 2016 to 2019. * D-SIBs are set to be named by the FSC by the end of December 2015. 2. Considering domestic economic conditions, the FSC should decide on a quarterly basis whether to impose a countercyclical capital buffer and, if so, levels of such capital requirements (ranged from 0% to 2.5%). 3. The FSC may require banks falling behind the evaluation of risk management by the FSS to hold an additional capital under the Basel II. 4. Internet-only banks are to be subject to the Basel I rules by 2019, while the Basel III rules are to be phase in for them from 2020 to full implementation in January 1, 2023. The liquidity coverage ratio(LCR) applied to Internet-only banks are to be raised by 10 percent points ever year from 70% for 2016 to 100% for 2019. EFFECTIVE DATES- additional capital requirements for D-SIBs, countercyclical capital buffer: January 1, 2016- eased capital rules for Internet-only banks: effective immediately* Please refer tothe attachedPDF for details.
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Dec 16, 2015

FSC-FSS Meeting for Monitoring Financial Market Conditions

The FSC and the FSS held a meeting to make sure that Korea’s financial markets are prepared for the impact of the Fed’s possible rate hike. RECENT TRENDS IN CAPITAL FLOWSThe expectation of a U.S. rate increase weighs on global stock markets. External risk factors prompt volatility in Korea’s financial market with foreigners’ net selling of stocks and investors’ appetite for safer assets. Kospi fell 3.0% in recent days(Dec.1~Dec.15), while the yield on 3-year government bonds dropped 5.2bp in the same period. However, the general market view is that capital outflows would not be expanded sharply, looking into characteristics and causes of recent outflows. In 2015, foreign investors sold an average of KRW 1.7 trillion per month in the stock market, which is less than the net selling of KRW 2.5 trillion per month for the past 10 months and less than the net selling of KRW 2.4 trillion per month in the following months of the so-called ‘taper tantrum’ (March~June 2013). Since September this year, oil producers like Saudi Arabia have been leading foreign net selling as their fiscal conditions deteriorate with falling oil prices. The net selling mode is hardly related to changes in foreign investors’ appetite to Korean stocks. US funds, which represent a largest share of Korea’s stock market(40%), continue to remain net buyers in November and December amid rising possibility of a U.S. interest rate increase. European funds sold a net KRW 10.2 trillion of Korean shares from June to September this year, but the pace of selling has slowed since then. STOCK MARKET The Korean stock market is expected to face turmoil in the short term after the Fed’s decision. However, many investment banks forecast that the Kospi will gradually bounce back to a level of 2,100 or beyond in 2016. Given strong fundamentals of the Korean economy, undervaluation of Korean stocks could appeal to investors once the Fed’s rate hike finally removes uncertainty. The FSC will closel
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Dec 14, 2015

Policy Direction for Household Debt Management

The FSC announced its policy direction for household debt management and a guideline to encourage banks to strengthen their mortgage application screening so that borrowers take out loans within their repayment ability and repay in installments from the beginning. HOUSEHOLD DEBT GROWTH POLICY DIRECTION Korea’s household debt grows fast to amount to KRW 1,166 trillion at the end of September 2015. The rapid growth is attributable to a combination of several factors such as growing demand for loans amid low interest rates, eased restriction on lending for home buyers and housing market recovery.The increase is mainly from mortgage lending by banks, which is at lower interest rates and maintains soundness. In particular, group lending for apartment buyers has largely increased as markets for new apartments for sale and reconstruction recover. Since the government-backed program to improve mortgage debt structure was launched in March this year, shares of amortized and fixed-rate mortgages rose to 37.5% and 33.6% respectively out of the total mortgage lending by banks at the end of September 2015, compared to 6.4% and 0.5% at the end of 2010. As household debt grows faster than household income, the government is taking comprehensive measures to 1) increase household income to boost borrowers’ repayment ability, 2) improve household debt structure; and 3) support low-income households. It is all the more important to improve structural soundness of household debt in response to potential risks such as the U.S. interest rate hikes. Household debt management policy also requires a balanced approach which takes into account various factors such as private consumption, housing market conditions and regulatory effects on the real economy. Therefore, the government is working towards minimizing potential risks in household debt, consistently upholding the principle that household debt should be borrowed within the borrower’s repayment ability and paid back in installmen
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Dec 09, 2015

FSC-FSS Meeting for Monitoring Financial Market Conditions

The FSC and the FSS held a joint meeting this morning to monitor and preemptively respond to internal and external risk factors in financial markets amid rising possibility of the Fed’s rate hike at the upcoming FOMC meeting next week. RECENT FINANCIAL MARKET CONDITIONS Externally, stock and bond markets in both developed and developing economies are sluggish as investors remain risk-averse ahead of a possible rate hike this month. Internally, growing uncertainties over the global economy increase volatility in domestic financial markets with net selling of stocks by foreign investors and increased appetite for safer assets.Meanwhile, monetary policy divergence among the world’s central banks will widen with the ECB’s further monetary easing last week and the Fed’s possible increase in the U.S. interest rates next week, which are likely to increase global market volatility. The FSC will keep domestic risk factors in check so that such risks in combination with external factors should not heighten anxiety among market participants. OVERVIEW OF KOREA’S FINANCIAL SECTOR SOUNDNESSFinancial institutions across the sector maintain soundness in their capital adequacy and asset quality. It is unlikely that internal and external risks – e.g. increases in U.S. interest rates or corporate restructuring – undermine the soundness of the financial system. Capital adequacy ratios of financial institutions across the sector have quite improved compared to those at the time of the 2008 global financial crisis to have a greater buffer against external shocks. As of the end of September 2015, financial institutions’ capital adequacy ratios are 2 to 3 times higher than regulatory minimum requirements. Banks’ loan loss coverage ratios, likely to be affected by corporate restructuring, stand at 133.1% as of the end of September this year, which is enough to absorb losses from bad loans. * Ratios of loan loss provision to substandard loans(SBLs): 120.5% (2013), 124.0%(20
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Nov 29, 2015

Preliminary Approval Granted to Kakao and KT Consortiums for Internet-only Bank

The FSC granted preliminary approval on November 29 to two consortiums – one led by Kakao and the other by KT Corp. – out of three bidders to set up internet-only banks under its plan announced on June 19, 2015. Under the current Banking Act, the FSC gave out the preliminary licenses for internet-only banks on two conditions: 1) the two consortiums shall operate banking business in the form of electronic financial transaction business ; and 2) they shall meet qualifications to run banking business such as manpower, organization and electronic facilities before applying for final licenses. The final approval will be granted after a review of relevant regulations upon their applications. The two banks – Kakao Bank and K-Bank – shall start business operation no later than 6 months after they receive the final approval. As a revision bill on the Banking Act was proposed to ease regulations on minimum equity capital and ownership in Internet-only banks, the FSC will additionally grant license for internet-only bank in accordance with the revised Act after the revision is finally passed the National Assembly.* Please refer to the attached PDF for details.
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Nov 27, 2015

Recent Trend in ELS & DLS Issuance

The outstanding balance of ELS DLS issuance surged from KRW 51.6 trillion at the end of 2012 to KRW 94.4 trillion at the end of June 2015. Since then, the pace of increase has slowed down with the outstanding balance of KRW 97.6 trillion as of November 20, 2015. The issuance of HSCEI-tracking ELS DLS remains at the range of manageable levels as securities firms agreed upon voluntary rules in October that limit new issuance of such products within the range of redemption amounts. As a result, the outstanding balance of HSCEI-tracking ELS DLS remains almost unchanged from KRW 36.5 trillion at the end of September and is expected to decrease after 2016. ※ New issuance of HSCI-based ELS DLS from November 1 to 20 this year amounts to KRW 404.6 billion. Net increase in the outstanding balance, however, is only KRW 64.4 billion as the amount of KRW 340.2 billion was redeemed. The FSC assesses that securities firms maintain soundness and liquidity levels to hold risk factors under control. At the end of June 2015, securities firms maintain a net-capital-ratio(NCR) at 466.9% and a liquidity ratio at 138.1%. The results of liquidity stress test conducted on securities firms in September 2015 show that it is highly unlikely for them to experience systemic risk even at high level of stress similar to that of during the 2008 financial crisis.The FSC and FSS will keep monitoring concentration risks in ELS DLS issuance and other risk factors involving securities firms. * Please refer to the attachedPDF for details.
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Nov 02, 2015

Credit Card Merchant Fees To Be Lowered

The FSC plans to cut credit card merchant fee rates by 0.3%p~0.7%p from the end of January 2016 to reflect cost-saving factors in card business. As interest rates continue to remain at low levels, funding cost for credit card companies has decreased since 2012. The ban on VAN operators from providing large merchants with unfair rebate (implemented from July 2015) allows card companies more room for further cuts of VAN and merchant fees. The FSC expects lowering merchant fee rates would save KRW 670 billion for about 2.38 million merchants. * Please refer to the attached PDF for details.
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Nov 01, 2015

FSC Strengthens the Role of Policy Banks

The FSC outlined its plan to strengthen the role of Industrial Bank of Korea (IBK) and Korea Development Bank (KDB) as policy banks in a bid to support sustainable growth of start-ups and foster new growth drivers for the economy. 1. SUPPORT FOR THE GROWTH OF START-UP TECH COMPANIESThe role of policy banks – IBK and KDB – will be revamped in accordance with business growth stages of start-ups. IBK will boost its support for start-up and early-growth stage companies, increasing its financial support per year from the current KRW 9.1 trillion up to 15.1 trillion in 2018. KDB will be more focused on selecting and supporting candidate among small businesses to become strong and medium-sized companies. Its annual financial support for such companies will from the current KRW 21.6 trillion to KRW 30 trillion in 2018. 2. SUPPORT FOR NEW GROWTH INDUSTRIESIBK and KDB will increase financial support for new growth engine sectors such as intelligent robots, wearable smart devices and renewable hybrid systems. KDB plans to provide such new growth industries with more than KRW 20 trillion per year in 20 trillion, up 48.1% from the current KRW 13.5 trillion in 2014. IBK will also boost its annual financial support for such companies from the current KRW 29.6 trillion to KRK 33 trillion in 2018. Policy banks’ investment banking(IB) businesses will be readjusted to more focus on activities in which private IBs are not actively involved – e.g. debt issuance in overseas market, MAs for corporate restructuring, SOC investments, etc. 3. CORPORATE RESTRUCTURING For cyclical industries, KDB will strengthen their screening and monitoring system for corporate lending and provide temporarily financially distressed companies with liquidity. In regard with corporate restructuring, policy banks will take the initiative in restructuring key sectors in accordance with the government’s economic policy, given the impact of restructuring such industries on employment and the national econ
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Oct 30, 2015

Direction for Recovery and Resolution Regimes

CONTEXT AND PROGRESSAfter the Global Financial Crisis, there was a global consensus for the need of improving recovery and resolution regimes to prevent disorder in the financial market when financial conglomerate becomes insolvent and moral hazard of too-big-to-fail. At the G20 Summit in 2010, member countries agreed on adopting recovery and resolution plans (RRP) in line with the Key Attributes of Effective Resolution Regimes for Financial Institutions published by the Financial Stability Board for Systemically Important Financial Institutions (SIFIs). After close consultations with the relevant organizations and experts from financial and legal sectors, the Financial Services Commission (FSC) has determined the basic direction for improving the recovery and resolution regimes, namely introducing recovery and resolution planning framework and bail-in scheme. MAJOR CHANGES(1) Recovery and Resolution PlansRecovery and resolution plans assuming crisis situation will be produced on an annual basis and retained for that year, for major financial institutions identified as SIFIs. Recovery plan is financial institution’s ex-ante measures against insolvency, which aims to facilitate recovery of financial soundness through its voluntary normalization efforts. The plan will be drafted by each SIFI, assessed by the Financial Supervisory Service and reported to the FSC.Resolution plan, on the other hand, is an ex-ante plan drafted by the Korea Deposit Insurance Corporation and assessed by the FSC, to minimize negative impact on financial system after a troubled financial institution fails to recover its business based on voluntary endeavors. (2) Bail-in SchemeThis scheme is designed to require not only shareholders but also creditors to bear losses when a financial institution becomes bankrupt, thereby addressing moral hazard. The FSC is planning to provide a legal basis for ordering insolvent financial institution to convert debt to equity and/or write-off debt when deemed
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Oct 30, 2015

FSC Improves Prudential Standards Across Financial Services Sectors

The FSC plans to implement prudential regulations in accordance with global standards, while streamlining prudential standards for each sector to prevent regulatory arbitrage across financial services sectors. PRUDENTIAL REGULATIONS IN ACCORDANCE WITH GLOBAL STANDARDS- (BANKS) Regulatory regimes for Domestic Systemically Important Banks (D-SIBs), capital buffers, and Basel Pillar 2 will be implemented from 2016 and gradually strengthened over time. Detailed plans will be set out to adopt Recovery and Resolution Plans (RRP) from the end of 2017. Leverage ratios and Net Stable Funding Ratios (NSFR) are scheduled to be implemented from 2018. - (INSURERS) Consolidated Risk-Based Capital (RBC) and Own Risk Solvency Assessment (ORSA) are scheduled to be implemented in 2016 and 2017 respectively. The FSC is also considering recapitalization plans for insurers in preparation for IFRS4 phase 2 and measures to strengthen credit risk management for off-balance-sheet exposures. - (FINANCIAL GROUPS) The FSC plans to establish a best practice guideline for consolidated supervision over financial groups in 2016 to assess and manage risks by group unit, as the current system is much focused on sector-wide supervision. PRUDENTIAL STANDARDS BY SECTORThe FSC will ease regulations deemed excessive given the purpose of such measures.- (BANKING)Loan-to-deposit (LTD) regulations will be maintained for now , while LTD regulations on foreign banks’ branches will be partially eased. Foreign branches will be allowed to include their long-term borrowings with a maturity longer than one year from headquarter offices in calculation of deposits. The “legal reserve” requirement will be abolished as its regulatory effectiveness has diminished with the introduction of Basel III. - (INSURERS) When deemed necessary preemptive measures for financial soundness, insurance companies will be allowed to issue subordinate bonds. Issuance of hybrid bonds will be permitted whenever necessary to secure so
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Oct 22, 2015

UAMCO To Expand Its Role Into Corporate Restructuring

United Asset Management Company (UAMCO) will provide KRW 3.25 trillion in seed money for corporate restructuring of financially distressed companies. A corporate restructuring organization will be newly established under UAMCO next month to buy debts and shares of troubled companies through PEFs to help them get back on track. The FSC expects the new role of UAMCO to shift the initiative in corporate restructuring from creditor banks to market forces. * Please refer to the attached PDF for details.
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Oct 19, 2015

FSC Roadmap for Insurance Business Reform

BACKGROUNDKorea’s insurance industry has rapidly grown since 2000 to become the world’s eighth largest market with its total assets worth KRW 862 trillion, representing 19.8% of the Korean financial industry’s total assets, and 440,000 employees which account for 55.1% of the financial industry’s workforce. However, excessive ex-ante regulations on insurance policies and premiums stifled competition and innovation in insurance business, weakening the industry’s growth momentum. The FSC, therefore, outlined its plan to overhaul the regulatory framework on insurance business, which will be a remarkable reform initiative in 22 years since the insurance liberalization of 1993. Under the roadmap, the FSC will shift its regulatory focus from ex-ante regulations to ex-post supervision to promote price and service competition in insurance business, while strengthening the protection of policyholders and the financial soundness of insurance companies. MAJOR REFORMS1. GIVE INSURERS MORE AUTONOMY IN DEVELOPING INSURANCE PRODUCTS In principle, insurance companies will be no longer required to report their new products to the financial authorities prior to the sale, except for mandatory insurance and insurance products with new types of risk coverage. (Scheduled to be implemented in April 2016 after relevant regulations are amended) Standard insurance policies established by the financial authorities will be abolished to encourage insurers to develop more diverse insurance products. Necessary provisions such as protection of policy holders will be set out in relevant regulations. For indemnity and car insurance policies that need standardization, the industry association will be required to establish standard policies to report to the FSS. (Scheduled to be implemented in the second half of 2016 after consultations with the industry and amendments to relevant regulations) 2. REFORM PRICING REGULATIONS The liberalization of insurance premiums in 1993 allowed insurance co
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Oct 16, 2015

Measures to Boost Competitiveness of Financial Investment Business

1. STRENGTHEN CORPORATE FINANCING FUNCTIONS ‘Comprehensive Financial Investment Business Entities,’ will be allowed to lend up to 100% of their equity capital in corporate credit offering. For credit loans with a maturity of less than one year, prudential regulatory requirements will be eased to levels applied to commercial banks. Brokerage firms specialized in SME financing will be designated to facilitate fundraising activities of SMEs and venture companies such as listings on KONEX or KOSDAQ, bond issuance and public placement of securities. Regulations on private placement of securities for qualified institutional investors (QII) will be eased to allow all companies whose total asset value of less than KRW 2 trillion to issue securities in the private placement. Current regulations permit private placement only to companies with total asset value of less than KRW 500 billion, while prohibiting listed companies, financial institutions and public corporations from issuing securities in the private placement. 2. EXPAND BUSINESS SCOPE OF SECURITIES COMPANIES Comprehensive Financial Investment Business Entities will be allowed to open stock markets for non-listed shares and non-competitive trading markets using prices at KRX for listed stocks. With the implementation of the revised FSCMA, securities firms will be allowed to register as hedge fund managers on condition that they have measures to prevent conflict of interest in place. The FSC will facilitate utilization of securities provided as collateral by securities firms in repo transactions and securities lending to offer more opportunities for profits. 3. ALLEVIATE REGULATORY CONSTRAINTS TO ENCOURAGE DIVERSE SERVICES Requirements for individuals and institutions to qualify for professional investors will be eased to enable more investors with sufficient knowledge to make investments within their own responsibilities. More exemptions will be permitted to the separation of investment banking and brokerage busi
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Oct 02, 2015

FSC Plans to Revise the KDIC-Woori Bank MOU

The FSC plans to revise an MOU signed with Woori Bank in 2000 in a bid to boost corporate value of Woori Bank and give the bank more autonomy in its management. We expect the revision to help assure market participants the government’s commitment to privatize Woori Bank and improve the bank’s corporate value to facilitate the sale. 1. Under the current MOU, the KDIC’s control is eased when its stake in Woori Bank falls below 50%. The revision will add a new requirement so that the KDIC’s control could be eased if accumulated recoupment of public funds exceeds 50% of the total injection of public funds into Woori Bank. * Woori Bank has recouped KRW 8.2 trillion, 64.2% of the total injection of public funds worth KRW 12.8 trillion as of end-September 2015. 2. The revision will specify conditions to terminate the MOU as the sale of the controlling stake in Woori Bank is open to both single buyer and multiple investors to form an oligopoly of shareholders. With the revision, the MOU could be terminated after approval by the Public Fund Oversight Committee (PFOC) in case that the KDIC no longer exercises effective control over the bank’s management – e.g. the controlling stake is sold to multiple investors to form an oligopoly of shareholders. 3. To give the bank more autonomy in generating profits, profitability will be evaluated by ROA and ROE, while factors such as the ratio of selling, general administrative expenses to adjusted operating income and adjusted operating income per capita will be removed. 4. To help the bank’s management work under a long-term plan, targets and evaluations under the MOU will be more focused on mid-to-long term ones.*Please refer tothe attachedPDF for details.
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Sep 07, 2015

China's Economic Slowdown and Its Impact on Korea's Economy

CHINA’S ‘NEW NORMAL’The IMF recently downgraded China’s economic growth forecast in 2015 and 2016 to 6.8% and 6.3% respectively, slower than the stable growth of 7% in three years since 2012. The growth rate of around 6% is still high, given the size of China’s GDP; however, the actual impact of such slowdown from 7% to 6% could be felt far more profound. China’s slowdown is attributed to excessive and inefficient investments by its massive economic stimulus plan. Inventory adjustments and deleveraging will weigh on China’s economy for a considerable period of time. It will be difficult to resolve oversupply in property market in a short period. To manage a soft landing of Chinese economy, the Chinese government set out a new economic model, so-called ‘Xin Chang Tai(新常態, new normal)’ since President Xi Jinping came to power in 2013. The new growth model is aimed to shift Chinese economy from export-driven rapid growth to consumption-led stable growth. It also includes structural reform, diversification of growth drivers and liberalization of financial markets. The effectiveness of the Chinese government’s stimulus plan to downward pressure is key to a soft landing of Chinese economy as it would take time for structural reform to achieve results. The Chinese government still has capability to prevent a hard landing of Chinese economy. However, emerging economies also need to be prepared in response to the spill-over effect of China’s new normal. IMPACT ON KOREA’S FINANCIAL MARKET There is a possibility that volatility might increase due to worries over China’s economic slowdown and potential spill-over effects of its structural reform. However, market participants view that it is unlikely for Chinese slowdown to cause a serious financial crisis. Since the 2008 global financial crisis, Korea’s economic fundamentals have been steadily improved. Its current surplus has grown to USD 89.2 billion in 2014 from USD 3.2 billion in 2008; its
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Sep 04, 2015

FSC Chairman Meets Foreign Banker Group

FSC Chairman Yim Jong-yong held a meeting this morning with the CEOs of foreign banks’ branches and representative offices in Korea to listen to their views and suggestions for improvement on Korea’s financial regulatory environment and help resolve difficulties in doing business in Korea.Prior to listening to suggestions made by foreign bankers, Chairman Yim pledged to lower entry barriers for foreign banks and introduce more flexibility in business licensing requirements for a foreign bank’s branch. For example, foreign banks have been recommended to open a representative office before they file an application for a business license to set up a branch. It is now up to foreign banks’ decision so that they are allowed to file an application for a business license to launch a local branch without opening a representative office. In practice, Indonesia’s BNI and China’s Guangda Bank have recently filed an application for launching its Korean branch respectively, which is now under review for regulatory approval. Currently, foreign banks are required to meet at least one of three requirements to start business in Korea in regard with credit ratings, asset levels and the number of foreign branches. In reviewing such requirements, the FSC will introduce more flexibility depending on the scope and nature of their business. As the FSC pushes forward its financial reform initiative to strengthen the financial sector’s competitiveness, we welcome views and suggestions from foreign financial institutions. The FSC will continue to improve Korea’s financial regulatory system in accordance with international standards. * Please refer to the attached PDFfor details.
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Aug 25, 2015

Opening Remarks by FSC Chairman at Market Monitoring Meeting over Current Stock Market Conditions

The FSC Chairman Yim Jong-yong convened a meeting with the FSS, KRX, and KCIF at 7 a.m. on August 25 to monitor global and domestic financial market conditions and to discuss measures to weather through the current market turmoil. *Please find in the following the summary of the Chairman’s opening remarks at today’s meeting. ***********Korea’s stock market is undergoing tough times with heightening concerns over external factors such as China’s stock market plunge, the Chinese yuan devaluation and the prospect of Fed’s rate hike. The KOSPI has sharply fallen to a year-low of 1,829.81 on August 24 from the year’s high of 2,173.41 on April 23 2015, as global stock markets tumble. Foreign investors turned net sellers since June this year. Korea’s stock market, however, fell less than other major markets in the Asia region. Stock prices in Korea dropped 13.5% compared to the end of May this year, while 30.4% in China, 22.5% in Hong Kong and 23.6% in Taiwan. The amount of net sales by foreigners in Korean stock market is relatively small. Foreign investors sold 0.36% of market capitalization in Korean stock market from June to August, while 0.51% in Taiwan, 0.49% in Thailand, 0.51% in Malaysia over the same period. These are evidence that market participants home and abroad see Korea’s market fundamentals sound. As external uncertainties seem to continue for some time, I would like to ask relevant institutions to join our efforts and take actions to reduce volatility in Korea’s capital markets. To this end, we need to continue our efforts to restore market confidence and keep foreign investors informed accurately about Korea’s economy and financial sector. In the longer term, it is important to make Korea’s capital markets robust enough to withstand external shocks by pushing ahead structural reforms and strengthening competitiveness of our capital markets. I would like to ask heads of relevant institutions here today to join our efforts on the foll
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Aug 21, 2015

FSC Holds Meeting over Recent Global Financial Market Condition & Its Impact on Korea's Stock Market

The FSC held a meeting with the FSS, KRX, and KCIF at 8 a.m. on August 21 to discuss recent global financial market condition and its impact on Korea’s stock market.GLOBAL FINANCIAL MARKET CONDITIONGlobal stock markets recently went down with heightening global risk factors such as China’s stumbling stock market, its currency devaluation and speculation about the Fed’s rate hike. - Stock markets in major economies mostly went on a downward trend since June this year. Emerging markets slumped further compared to advanced ones. - Global stock funds are flowing into advanced market out of emerging markets amid growing uncertainty over global financial condition. IMPACT ON KOREA’S STOCK MARKETVolatility in Korean stock market has increased recently as foreign investors began to sell and stock prices stumbled with growing external uncertainty. - Foreign investors have turned net sellers of KRW 4.3 trillion KOSPI shares since June this year as external uncertainties heightened.- The KOSPI and KOSDAQ indexes have slumped recently. * KOSPI: 1,916(end-2014) → 2,173(April 23, 2015) → 1,915(August 20, 2015) KOSDAQ: 543(end-2014) → 783(July 20, 2015) → 657 (August 20, 2015) Recent adjustments in stock market prices are seen largely due to external factors such as diminishing global market confidence, rather than domestic market factors. - While foreign investors are selling shares in most of Asian stock markets, the amount of net sales by foreigners in Korean stock market is relatively small.- Korea’s stock market indexes did not fall sharply, compared to those of Asia’s major markets. Market fundamentals in Korea are sound, and global financial markets remain stable in comparison to previous market turmoil in 2011 and 2013. We see market participants do not have to react excessively to recent market developments. - Korean stock prices are relatively undervalued. Korea’s foreign exchange reserves stood at USD 374.7 billion, the world’s sixth largest as o
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Aug 17, 2015

KRX Designated as Trade Repository

BackgroundIn the aftermath of the global financial crisis, G20 nations are introducing Trade Repository(TR) as an instrument to strengthen regulations on over-the-counter derivatives market. TR is a financial market infrastructure that collects, manages, and analyzes data related to OTC transactions.In line with such global trend, the FSC and FSS announced a plan to introduce TR in Korea on June 17, 2004 and have been engaging in relevant preparatory procedures.Introduction of TR in KoreaThe FSC, FSS, and financial experts formed a task force and conducted a thorough study related to TR from July to December, 2014. A special committee was formed in July 2015 to devise detailed qualification standards to be designated as TR based on the study results.On August 17, the Korea Exchange was finally designated as TR after going through a screening process on two bidders for TR - the KRX and Korea Securities Depository.Expected EffectsIntroduction of TR is expected to improve credibility and global competitiveness of Korea’s financial market infrastructure. It will also enhance financial transaction transparency and strengthen market monitoring capability as it enables more efficient management and analysis of data related to OTC derivatives transaction.*Please refer to the attachedPDF for details.
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