FSC works to ensure that finance plays a key role in developing innovative businesses and supporting the real economy, thereby fueling Korea’s more vibrant economic growth. Promoting advanced financial industry, stable financial markets, fair market order and reliable consumer protection are among FSC’s key policy agenda. Digital transformation and big data are increasingly playing larger roles in various aspects of financial services. In the era of 4th industrial revolution and digital economy, finance will help boost growth potential and create jobs as the government seeks to advance its Digital New Deal policy.
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Nov 27, 2013
- Plan to Strengthen Competitiveness of Korea's Financial Industry
- The FSC announced its ‘Plan to Strengthen Competitiveness of Korea’s Financial Industry’ or the so-called ‘10-10 Value-Up Plan’ aimed at raising the added value that the financial industry generates up to 10% of the GDP over the next 10 years.BACKGROUNDThe financial industry greatly contributed to Korea’s rapid economic growth. Since the global financial crisis in 2008, however, Korea’s financial industry has lost its growth momentum and vitality. Moreover, repeated security incidents and fraud scandals in the financial sector significantly undermined financial consumers’ confidence in the industry.At the same time, the financial industry faces new challenges as Korea’s economy is shifting to slower growth, searching for a new growth model based on innovative technology and creative ideas. The population is also rapidly aging. Faced with such paradigm-shifting changes, it is time for both the government and the financial industry to seek new growth drivers.The FSC proposed the ‘10-10 value-up’ as a vision for Korea’s financial industry for the first time when Chairman Shin Je-Yoon met CEOs of financial holding companies in May this year. For the last six months since then, the FSC held 68 meetings with those in the financial industry to gather their opinions.Based on such a bottom-up approach, the FSC drew up the ’10-10 value-up’ plan focused on its feasibility. As a rolling plan, the ‘10-10 value-up plan’ will continue to be reviewed and updated on a regular basis in order to respond to market developments in a timely and flexible manner. OVERVIEWThe ‘10-10 value-up’ plan is to provide a blueprint for the financial industry’s development. The financial industry will be developed into a high value-added service sector as a new growth driver and generate decent jobs. To this end, the plan set three missions and nine objectives.KEY CONTENTS1. Promote competition and innovation in the financial sectorRegulatory barriers will be sig
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Aug 27, 2013
- Plan to Reshape Roles of Policy Banks
- The FSC announced its plan to reshape policy banks in order to streamline their overlapping functions and reinforce their policy financing roles for start-ups SMEs, new growth industries and overseas projects.MERGER OF KDB WITH KOFCThe Korea Finance Corporation (KoFC)1 will be re-merged with KDB, while its overseas assets worth KRW 2 trillion will be transferred to the Export-Import Bank of Korea (Korea Eximbank).KDB Financial Group Inc. will be merged with KDB, while its subsidiary units2 will be put up for sale. The timing and method of selling KDB subsidiaries will be determined later depending on market demands and conditions.The government will maintain its controlling stake3 in KDB, while portions of minority stake could be divested through an initial public offering (IPO).KDB will continue to offer retail banking services of the current level for the time being to minimize customers’ inconvenience but gradually reduce its retail banking business. KDB will no longer open new branches or attract deposits for retail banking service.The KoFC, KDB Financial Group Inc., and KDB are entities consolidated in financial statements; therefore, the merger will have an insignificant impact on BIS ratios of KDB.4The revision bill on the KDB Act will be submitted to the National Assembly forparliamentary approval this year so that the consolidated KDB could be launched in July 2014.POLICY FINANCING FOR EXPORTERS OVERSEAS PROJECTSKorea Eximbank and the Korea Trade Insurance Corporation (or ‘K-sure’) will continue to provide loan guarantees for exporters and finance overseas projects under the current framework with focus on their core functions.Non-core businesses of Korea Eximbank and K-sure will be gradually curtailed. In principle, K-sure will stop providing guarantees for loans extended by policy banks such as KDB, Korea Eximbank, and the KoFC. Korea Eximbank will gradually reduce its short-term loans5 up to less than 40% until 2017.Short-term export insurance busi
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Aug 20, 2013
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Aug 01, 2013
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Jul 23, 2013
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Jul 02, 2013
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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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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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Apr 03, 2013
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Mar 04, 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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Oct 23, 2012
- Legislation Notice of Covered Bonds Act
- BACKGROUNDSince the global financial crisis, there has been growing need for a legal framework to issue covered bonds in order to ensure financial institutions’ stable funding channel and financial markets’ stability.1 Covered bonds are expected to reduce financial institutions’ funding cost and serve as a stable funding channel in the event of financial crises. It is also expected that covered bonds will help improve the structure of household debt by providing financial institutions with a funding source of long-term and fixed rate loans.KEY CONTENTS1. Definition of covered bondsCovered bonds are a type of bonds secured by a cover pool of assets that the issuer provides as collateral. In the event of the issuer’s bankruptcy, investors have a preferential claim to the cover pool and are guaranteed dual recourse to the issuer’s other assets as well.2. Eligible issuers of covered bondsIn order for a financial institution to issue covered bonds, it should satisfy both institutional and eligibility requirements.- (institutional requirement) banks, Korea Housing Finance Corporation, Korea Finance Corporation, and other equivalent institutions designated by Presidential Decree- (eligibility requirement) a financial institution with equity capital of more than KRW 100 billion and a BIS ratio of more than 10 %, capable of ensuring proper funding, operation and risk management.3. Cover poolA cover pool is composed of cover assets, liquid assets and other assets with a minimum coverage ratio of collateral more than 105%.- (cover assets) mortgage loans, debts issued by governments and public institutions, government bonds- (liquid assets) cash, certificates of deposit issued by other banks with a maturity of less than 100 days- (other assets) recovery from cover assets, property earned through management, operation, and sale of assets, derivative contracts for hedging against currency and interest rate risks4. Registration and issuanceAn issuer should register its i
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Apr 16, 2012
- Establishment of Korea New Exchange
- The FSC announced its plan for creating a stock exchange exclusively for SMEs, tentatively named ‘Korea New Exchange (KONEX)’, in order to facilitate direct financing of venture start-ups and SMEs through the capital market.BASIC DIRECTIONS OF THE PLAN- Provide investors with new investment opportunities by facilitating listing of SMEs with high growth potential- Reduce the costs of listing and maintaining the listing for SMEs- Establish a credible market with fair pricing mechanismKEY SCHEMES FOR KONEX1. Broaden the scope of ‘professional investors’- ‘Professional investors’* under the definition of the Financial Investment Services and Capital Markets Act (FSCMA)*financial investment firms (e.g. securities companies), mutual funds, policy banks (e.g. Korea Development Bank, Industrial Bank of Korea, Korea Finance Corporation), banks, insurance companies, pension funds (e.g. National Pension Service)**In principle, retail investors are allowed only indirect investment through mutual funds.- Among investors who are not ‘professional investors’ by the definition of the FSCMA, those with investment expertise in SMEs or risk-absorbing capability will be allowed to invest in KONEX-listed SMEs.i) ‘venture capital’ under the definition of the Support for Small and Medium Enterprise Establishment Actii) retail investors qualified for hedge fund investment more than KRW 500 million2. Set minimum requirements for listing and delisting- (Listing) The audit opinion on a company’s financial statement is proper; a company satisfies listing requirements on a selective basis in regard with equity capital, financial conditions and business performance; and etc.- (Delisting) A company falls into one of conditions for immediate delisting such as the court’s decision of dissolution or refusal of rehabilitation procedures; the audit opinion on a company’s financial statement is adverse or disclaimer of opinion; and etc.3. Designate advisors to assist SMEs’ l
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Mar 19, 2012
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Mar 06, 2012
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Jan 06, 2012
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Nov 14, 2011
- FSC Approves Revision of Regulations on Financial Investment Business
- The FSC approved a revision of Regulations on Financial Investment Business at its 19th regular meeting held on November 16, 2011. With the approval of revision, the FSC laid the foundation for introducing home-grown hedge funds and prime brokers.From the beginning of this year, the FSC has been closely working with a joint task force composed of the academia, industry, and relevant institutions for revisions of Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and related regulations.In order to ensure a soft landing of for home-grown hedge fund industry, the joint task force is currently drafting best practice guidelines, expected to be announced and implemented in November.*Please read the FSC press release “Proposed Revision of Regulations on Financial Investment Business” (Oct. 10, 2011) for Details.KEY CONTENTS OF THE REVISIONI. Regulations in regard with hedge funds1. Strengthened mechanism for preventing conflicts of interest arising from operations of hedge funds (Article 4-64)In order to prevent conflicts of interest, fund managers in charge of hedge fund operations, paid contingent remuneration, will be prohibited from operating other funds and discretionary investment assets, and sharing investment-related information.*In addition, it will be restricted for fund managers to directly or indirectly advertize names, investment performance and strategies of private equity funds including hedge funds.2. Criteria for hedge fund management firms and professionals(Companies) Asset management companies with a total of funds and assets under management more than KRW 10 trillion will be allowed to operate hedge fund management business.* “Track Record” criteria for securities and investment advisory firms(i) Securities firms with equity capital more than KRW 1 trillion(ii) Investment advisory firms with assets under management more than KRW 0.5 trillion(Persons in charge of hedge fund operation) Professionals with more
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Nov 04, 2011
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Oct 10, 2011
