Press Releases - Financial Services Commission

Press Releases

Period: start
~
end

1month 3month Reset

Requirement

Feb 12, 2013

FSC/FSS Emergency Meeting on the Effects of North Korea's Nuclear Test

The FSC Vice Chairman Choo Kyungho convened an FSC/FSS emergency meeting at 2:30 pm after North Korea had conducted underground nuclear test Tuesday on February 12, 2013 to discuss the effects of the nuclear test on Korea’s financial market and measures to be taken to keep market stability.Right after North Korea’s nuclear test was reported, the KOSPI temporarily fell by 10 points but instantly bounced back.1 Foreign exchange market also remains stable with a net capital inflow from abroad.As the nuclear test has been widely expected, Korea’s financial market maintains its stability even after the event was confirmed. North Korea’s previous nuclear tests had a limited impact on Korea’s financial market, which had been temporarily affected but quickly recovered to normal conditions prior to the events.Effects of North Korea’s previous nuclear tests on Korea’s financial market t* t+1 t+7 t+15 t+30 1st Nuclear Test (October 9, 2006) KOSPI -2.41% -1.75% +0.17% +0.30% +3.71% USD/KRW +1.54% +1.10% +0.66% -0.47% -1.45% 2nd Nuclear Test (May 25, 2009) KOSPI -0.20% -2.26% +0.79% +0.62% +1.79% USD/KRW +0.09% +1.21% -1.14% +1.17% +1.69% *the day when the event occurredThe FSC/FSS will continue to monitor domestic and overseas financial market situations and execute contingency measures to keep market stable if needed.*Please read the attached file for details.
Attachment 1
Jan 29, 2013

Covered Bonds Act Approved at Cabinet Meeting

The bill on the Covered Bond Act was approved at the Cabinet meeting on January 29, 2013, which will be submitted for parliamentary approval in February 2013.The Covered Bond Act will be enforced in 6 month after its public announcement.For details about the Covered Bond Act, please refer to our press release Legislation Notice of Covered Bond Act published on October 23, 2012.* Please read the attached file for details.
Attachment 2
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.
Attachment 1
Dec 12, 2012

FSC/FSS Emergency Meeting on the Effects of North Korea's Rocket Launch

The FSC Vice Chairman Choo Kyungho convened an FSC/FSS emergency meeting at 1:30 pm after North Korea had launched its long- range rocket at 9:51 am Wednesday on December 12, 2012 to discuss the effects of the launch on Korea’s financial market and measures to be taken to keep market stability.As the launch on December 12 has been widely expected, Korea’s financial market remains stable even after the announcement of the rocket launch.1 Market experts view the rocket launch will have a limited impact on Korea’s financial market as North Korea’s previous attempts to test its long-range missile did.2The FSC/FSS will continue to monitor domestic and overseas financial market situations and execute contingency measures to stabilize markets if needed.*Please read the attached file for details.
Attachment 1
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
Attachment 1
Nov 22, 2012

The Korean Government's Position on Lone Star's Filing for Arbitration

Lone Star Funds (“Lone Star”) on November 21, 2012 filed an arbitration claim with the Korean government at the International Center for Settlement of Investment Disputes (ICSID), claiming that the Korean government violated its obligation under the investment treaty between South Korea and Belgium and Luxembourg.The Korean government does not consent to Lone Star’s claims. Since Lone Star sent a written notice of a dispute in May 2012, the government created a task force to prepare for the arbitration. The Korean government will proactively set forth counter-arguments against Lone Star’s claims and make our best effort in proceeding with the arbitration.* Please read the attached file for details.
Attachment 1
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
Attachment 1
Oct 12, 2012

FSB Plenary Meeting Held In Tokyo

The FSC Vice Chairman, Choo Kyung Ho visited Tokyo during October 10 to 11 to attend the Financial Stability Board’s Plenary Meeting.Top regulators from 24 FSB member countries as well as from BCBS and other standard-setting bodies attended the meeting to uphold and execute the agreements made on financial regulatory reform initiatives at the G20 Mexico Summit last June.Some of the issues agreed upon were: vulnerabilities in the financial system; G-SIFIs and D-SIFIs; shadow banking; and OTC derivatives regulation.*Please read the attached file for details.
Attachment 1
Sep 27, 2012

Plan for Revision to Regulations on Supervision of Banking Business

BACKGROUNDThe FSC/FSS started to revise the Regulations and Detailed Regulations on Supervision of Banking Business for domestic implementation of the Basel III rules, which will take effect in 2013.KEY REVISIONS1. Revision of minimum capital requirementMinimum capital requirement for banks will be subdivided from the current 8% of the total capital into three criteria: 4.5% of common equity Tier 1, 6% of Tier 1 capital, and 8% of the total capital.2. Introduction of capital buffer1Banks will be required to reserve an extra capital buffer of 2.5%p in addition to the minimum capital requirement. Unlike minimum capital ratios, capital buffer is not a mandatory requirement; however, if banks fail to meet capital buffer requirement, they will be limited in dividend payment or share repurchase.3. Revision of conditions for corrective measures to be taken and evaluation of management status(1) Conditions for corrective measures to be takenCurrently, banks are ordered to take corrective measures depending on their equity capital ratios: management improvement recommendation for less than 8%, management improvement requirement for less than 6%, and management improvement order for less than 2% of equity capital.With the implementation of Basel III rules, such conditions will be further subdivided into three criteria: total capital ratio, Tier 1 capital ratio, and common Tier 1 capital ratio. Corrective measures Current Proposed revision Management improvement Less than 8% of BIS ratio 1. less than 8% of the total capital 2. less than 6% of Tier 1 capital recommendation 3. less than 4.5% of common Tier 1 Management improvement Less than 6% of BIS ratio 1. less than 6% of the total capital 2. less than 4.5% of Tier 1 capital requirement 3. less than 3.5% of common Tier 1 Management improvement order Less than 2% of BIS ratio 1. less than 2% of the total capital 2. less than 1.5% of Tier 1 capital 3. less than 1.2% of common Tier 1 (2) Evaluation of management statusUnder the
Attachment 1
Sep 25, 2012

FSC/FSS to Tighten Rules on Commercial Papers

BackgroundCommercial paper (CP) is an unsecured promissory note issued by companies, based only on corporate credits with no collateral backed. It is widely sold by firms for short-term funding needs as the paper requires simpler selling process than corporate bonds.CP issuance shrank temporarily after the Asian financial crisis and the credit card turmoil, but it resumed its growth trend since 2005.However, loose disclosure regulations and lack of transparency in the CP market boosted concerns over risk management and investor protection, as well as improper CP sales.The financial regulator recognized the need to find vulnerabilities in the CP market and develop measures to improve transparency and investor protection.Tighter Rules on CPThe financial regulator will tighten rules on disclosure requirement for CP in a bid to improve transparency in the CP market. It will also strengthen regulation and supervision of CP issuance and support fully-disclosed electronic trading in CPs.Currently, an asset-backed commercial paper (ABCP) issuer discloses trade data and credit rating on the homepage of Korea Financial Investment Association on the day of issuance.From October, an ABCP issuer will be required to disclose more information on the paper, including financial soundness of issuers, collateral assets and specification on product structuring as well as credit ratings.The regulator will push for amendments to Financial Investment Services and Capital Markets Act, which will make it mandatory to disclose the credit rating summary on the FSS’s DART.Currently, brokerages have no reporting obligations for ABCP transactions and the regulator is limited in its ability to monitor the CP market and respond immediately. From next year, brokerages will be required to report details on ABCP transactions.In addition, one-stop inquiry system for CP issuance will be up and running from October to provide investors information including CP’s credit ratings, collateral assets and
Attachment 1
Sep 06, 2012

Trends in ELS/DLS Markets and Related Measures for Improvement

BACKGROUNDSince the global financial crisis, the issuances of equity-linked securities (ELS) and derivatives-linked securities (DLS) have surged with the trend of low-interest rate and growing demand for customized investment.With the growing popularity of ELS and DLS, there is need to strengthen investors protection accordingly. In particular, ELS and DLS are legally treated same as corporate bonds; therefore, investors remain vulnerable to the issuer’s credit risk.Against this backdrop, the FSC came up with measures to strengthen investor protection and the soundness of ELS/DLS markets as follows:KEY MEASURES1. Monitoring system for the issuance and operations of ELS/DLSThe monitoring system will be established for more effective management and oversight of the issuance and operation of ELS/DLS. Hedged assets will be managed separately from client-owned assets. Securities houses will be required to establish separate electronic systems by issuers to manage hedged assets. The FSC will review ways to legally differentiate hedged assets from client-owned assets and provide effective protection for investors’ assets. The status of ELS/DLS issuances and operation should be reported to the FSS on a monthly basis.2. Strengthened management of issuers’ credit riskThe FSC will discourage securities houses from excessively issuing short -term ELS/DLS with three-month or less maturities in order to prevent overheated competition in the markets. Based on the monitoring of market situation, the FSC will consider whether to directly limit the issuance of ELS/DLS to a certain ratio of issuers’ equity capital.*Please read the attached file for details.
Attachment 1
Aug 22, 2012

Key Improvements to the Short-term Benchmark Rate System

BACKGROUNDThe FSC created a joint taskforce with affiliated agencies, the academia and industry groups on July 19, 2012 to come up with plans to improve the current system of short-term benchmark rate. The taskforce held its fifth meeting on August 21 to announce three major improvements out of various proposals discussed so far.KEY IMPROVEMENTS1. Introduction of short-term COFIXThe Cost of Funds Index (COFIX) was first introduced to replace the certificate of deposit (CD) rate in loan markets. As a benchmark lending rate, COFIX reflects banks’ costs of funding. However, an average maturity of loans linked to COFIX is nine to ten months, and COFIX is announced only once a month. Therefore, for floating-rate loans with shorter maturities less than one or two years, the CD rate is still preferred to COFIX.As a complementary measure, a short-term COFIX will be newly introduced, which will be announced every week. The short-term COFIX reflects banks’ average funding costs for short-term lending with a three-month maturity. The first announcement of the short-term COFIX is scheduled for the first week of November this year, tentatively.2. Stimulation of issuance of brokered CDsBanks agreed to issue brokered CDs to keep an average balance to a level of KRW 2 trillion. In order to enhance validity of the CD rate, 50% of the newly issued CDs worth KRW 1 trillion will be issued in brokered CDs with a three-month maturity.3. Improved calculation of the CD rateThe Korea Financial Investment Association will create basic principles on quote submissions, and improve the way the CD rate is calculated in a more valid and transparent manner.The basic principles and stricter disclosure rules will be in place by September this year. The FSC will pursue amendment to the supervisory regulations on the benchmark rate in the second half of this year.*Please read the attached file for details.
Attachment 1
Aug 17, 2012

Complementary Measures to Debt-to-Income Regulation

BACKGROUNDThe regulation on debt-to-income (DTI) ratios is one of basic financial principles to ensure borrowers not to borrow beyond their means. Currently, the DTI ratio applied in Seoul is 50%; and 60% in metropolitan areas.There have been discussions on how to improve the current regulation on DTI ratios. The FSC gathered opinions from financial and construction industries and relevant experts to come up with complementary measures to the DTI regulation. While maintaining the basic principle to ensure borrowers’ ability to repay their debt, the complementary measures include the following new features:(1) For young borrowers with stable income, estimates of their expected future income will be reflected into the denominator of income.(2) For retirees who hold assets but find it difficult to prove their income, their net assets will be reflected into the denominator of income.(3) Some measures previously taken to curb speculation will be eased.I. YOUNG BORROWERS’EXPECTED FUTURE INCOMEThe current DTI regulation count borrowers’ earned income at a time when borrowers apply for loans. However, as young borrowers’ income is expected to gradually increase over their work period, there is a need to take into account their expected future income.(Eligibility)The new rule will be applied to first-time home buyers aged less than 40 with earned income. Applicant should submit written documents issued by tax offices to prove earned income. Loan types covered by the new rule are loans with installment payments of principal and interest over the period of time longer than 10 years.(Annual income growth rate)Annual income growth rates will be adjusted based on the latest data published in annual reports of national tax statistics.1(Expected future income)With annual income growth rate for each age taken into account, an estimate of expected income average over the next 10 yearsII. RETIREES’NET ASSETSThe DTI regulation has not counted borrowers’ assets as income to
Attachment 1
Jul 19, 2012

Analysis of Korea's Househod Debt and Policy Response

BACKGROUNDKorea’s household debt has grown rapidly since the Asian financial crisis compared to the growth rate of Korea’s GDP and income, posing a potential risk to our economy. It has been also pointed out that Korea’s household debt is structurally vulnerable as household loans are mostly composed of floating-rate, lump-sum payment, and interest-only loans.Against this backdrop, the government took a set of measures to take the household debt growth under control.Last year, the ceilings on debt-to-income (DTI) ratios, temporarily eased, were reinstated in March. In June, the government took measures to curb household borrowing in the non-banking sector, while strengthening microfinance programs in order to ensure low-income households’ accessibility to financial services.Building on such measures, the government came up with a comprehensive package of measures in June 2011 to ensure a “soft landing” for the household debt risk, which includes properly managing total liquidity, improving households’ ability to repay their debt, strengthening financial institutions’ soundness, and reinforcing microfinance programs.With the recent economic slowdown and slow recovery of household income, there are limitations in taking drastic measures to curb household debt growth. There are also concerns raised about low-income or elderly borrowers’ ability to repay their loans.ANALYSIS OF HOUSEHOLD DEBT TRENDS1. OverviewIn 2011, Korea’s household debt grew at 8.1%, slower than 8.7% in 2010; however, household debt-to-GDP ratio and household debt-to-disposable income slightly rose1 as GDP and disposable income did not grow sufficiently in 2011.However, since the second half of 2011, the growth rate of household debt has slowed down.2 In the first quarter of 2012, outstanding household loans decreased for the first time in three years since 2009.The structural weakness of household debt has also been quite improved. The ratio of fixed rate loans by banks rose fro
Attachment 1
Jul 09, 2012

Fn Hub Korea Shortens Immigration Process for Foreign Investors

I. OverviewFn Hub Korea, a unit under the Financial Supervisory Service (FSS), and the Financial Services Commission (FSC) have implemented an improved finance investor express card system, effective July 2012 to ensure a shorter immigration process and streamlined procedures, thereby allowing convenient immigration entry privileges for foreign financial investors.The finance investor express card system is a system initially adopted in February 2010 by Fn Hub Korea and the FSC in cooperation with the Ministry of Justice in a bid to shorten the immigration process for the executives and employees of foreign financial companies in Korea. Those who have the financial investor express card are allowed to use an express lane for expedited immigration procedures.The improved card system has expanded the scope of card grantees based on branch offices’ contribution to the Korean financial economy. Previously, the express card was granted only to head(s) and deputy head(s) of branch offices with an operation fund of KRW 7 billion or more. The new system has expanded the previous qualifications to include employee(s) recommended by head of a branch office when its operation fund is in excess of KRW 150 billion. All applicants should hold D-7 (supervisory intra-company transfer) visa or F-5 (permanent residency) visa and have no record of violating the Immigration Control Act.The new system also cut short a review process for those who qualify for the aforementioned requirements. Under the previous system, all applications had to go through the FSC’s review process after their documents were submitted to Fn Hub Korea for verifying their qualifications.II. Detailed Improvements1. Shorter Immigration ProcessThe previous system required an extended period of time for issuing the express card due to the review by the committee comprised of five members from the FSC including Director General and Director for International Cooperation of the FSC, Board Control Division Deputy
Attachment 1
Jul 04, 2012

New Scheme for Credit Card Merchant Fees

BACKGROUNDMerchant fees on credit card transactions have been charged based on a sector-basis since the merchant fee scheme was first introduced in 1978. However, the sector-based fee scheme has been under criticism that the criterion is unclear and unreasonable. With the widening gap in merchant fees between large retailers and small merchants, it has been continuously argued whether the fee scheme is fair and appropriate.In an effort to overhaul the fee structure, the FSC made revision to the Credit Finance Business Act in March 2012, providing the legal grounds for revising the credit card merchant fee scheme for the first time since 1978.NEW SCHEME FOR CHARGING MERCHANT FEESSince then, a task force made up of market participants and the academia came up with the following new scheme.Credit card companies shall charge reasonable fee rates to each individual merchant, following the basic principles and standards proposed by the FSC.Large retailers1 are prohibited from asking credit card companies unfairly low fee rates, taking advantage of their dominant power. They are also forbidden from asking any kind of compensation in return for paying merchant fees to credit card companies.For small merchants with annual revenue of up to KRW 200 million, the preferential fee rate of 1.5% will be charged, compared with the current rate of 1.8%.EXPECTED OUTCOMESAs the sector-based merchant fee scheme is changed to an individual merchant-based fee schemes, we expect merchant fees will be charged in a fair and reasonable manner.Under the new rules, 96% out of 2.2 million merchants in total will be charged lower fee rates. The gap in merchant fees between large and small merchants will be reduced from the current 3%p to 1%p.As fee rates charged to small merchants are significantly cut, 68% out of 2.2 million merchants will benefit from lower rates.Card companies will refrain from excessively issuing credit cards and expanding businesses.UPCOMING SCHEDULE- Legislative notice of r
Attachment 1
Jun 27, 2012

Short Position Reporting Rules To Be Introduced

BackgroundThe Financial Services Commission (FSC), Financial Supervisory Service (FSS) and Korea Exchange (KRX) are aiming to introduce a rule that will make it mandatory to file a report on short positions with regulators from August 30, 2012. The rule should help regulators to have better access to data on short selling activities in the Korean markets.Short selling provides liquidity through diverse investment strategies and is an efficient price discovery mechanism. However, there were also concerns that short selling would distort market order and be abused for unfair trading in times of unstable stock markets.The proposed rule is designed to have a better picture of the overall short selling activities and a systematic collection of data on outstanding short positions so that regulators can cope with unfair trading in a timely manner.The way to adopt the new reporting requirement has been paved as proposed amendments to Enforcement Decree of Financial Investment Services and Capital Markets Act was approved by the cabinet council on June 26, 2012 and is due to be promulgated on June 26, 2012.Regulators will develop detailed provisions by collecting industry feedback and studying the short position reporting regime in other markets and reflect them in Regulation on Financial Investment Services.Proposed RulesAn investor, as opposed to a brokerage house, who has an open short position[1] resulting from short sales that amounts to or exceeds the threshold of 0.01 % of the issued share capital of a listed company[2] at the end of each trading day has an obligation to report the short position to the regulators.An investor that runs a number of units in pursuit of investment strategies independent from each other would be required to aggregate the short positions in a particular stock of all units ("Aggregation Units").The regulators set the threshold at 0.01%, a level that can help strengthen monitoring of short selling activities and cope with unfair trading acts
Attachment 1
Jun 21, 2012

Task Force Formed to Legislate the Covered Bond Act

BACKGROUNDThe FSC formed a task force to legislate the Covered Bond Act which held the first meeting on June 21, 2012.A year ago, the FSC/FSS established guidelines* on the issuance of covered bonds by banks, as one of follow-up measures to properly manage the rapid growth of household debt. However, the process of securitizations incurred excessive costs, and there remained uncertainty for covered bond investors to claim dual recourse of their investment. Therefore, there has been growing need for statutory rules for issuing covered bonds.* Refer to the FSC press release titled “Guidelines on Covered Bond Issuance” published on June 29, 2011With the legislation of the Covered Bond Act, the FSC expects the issuance of covered bonds would help banks reduce their funding costs; covered bonds would serve as a stable and long-term funding source for banks particularly in the event of crises; and it would contribute to enhancing the soundness of household debt by encouraging banks to extend more long-term and fixed-rate loansUPCOMING SCHEDULE- Draft bill of the Covered Bond Act by July 2012- Approval by the FSC and 40-day legislative notice from August to September 2012- Review by the Ministry of Government Legislation; Approval at the vice-ministerial and cabinet meetings: from September to October 2012- Submission to the National Assembly for parliamentary approval: November 2012*Please read the attached file for details.
Attachment 2
Jun 19, 2012

FSC Plan in line with Principles for Financial Market Infrastructures Issued by IOSCO-CPSS

BACKGROUNDThe International Organization of Securities Commissions (IOSCO) and the Committee of Payment and Settlement System (CPSS) announced Principles for Financial Market Infrastructures (FMIs), new international standards for payment, clearing and settlement systems.With the growing importance of FMIs’ management of crisis and risk after the global financial crisis, the IOSCO and the CPSS established stronger principles for FMIs combining the existing sets of international standard and recommended member jurisdictions to reflect the new principles into domestic supervisory standards by 2012.PRINCIPLES FOR FINANCIAL MARKET INFRASTRUCTURES1. General organizationAn FMI should have a clear legal basis for its major activities, transparent governance arrangements, and a sound risk-management framework for comprehensively managing legal, credit, liquidity, operational and other risks.2. Credit and liquidity risk managementAn FMI should secure sufficient financial resources to deal with risk and have appropriate system to manage collateral and margin deposits.3. SettlementAn FMI should provide clear and certain final settlement, at a minimum by the end of the value date and strictly manage risks associated with payment and physical deliveries of securities.4. Central securities depositoriesA central securities depository (CSD) should have appropriate rules and procedures to help ensure the integrity of securities issues and minimize the risks associated with the safekeeping and transfer of securities.5. Default managementAn FMI should have clearly defined rules and procedures to manage a participant’s default.Trusted assets should be kept separately by each participant.6. General business and operational risk managementAn FMI should hold sufficient liquid net assets funded by equity to cover potential general business losses and have appropriate systems to identify plausible sources of operational risk, both internal and external, and mitigate their impact.7. Acce
Attachment 1
Jun 14, 2012

FSC Chairman Visits Thailand and Hong Kong for Further Financial Regulatory Cooperation

The FSC Chairman Kim Seok-dong visited Thailand and Hong Kong from June 9 to June 13 to meet and sign MOUs with financial regulators for further cooperation. Chairman Kim also held meetings with executives of Korean businesses and financial companies to listen to their difficulties and help them localize their business operations.1. Further cooperation with financial authorities of Thailand and Hong KongThe FSC signed MOUs with Thailand’s Office of Insurance Commission (OIC) and Securities and Exchange Commission (SEC) for exchanging financial regulatory and supervisory information and sharing financial expertise.In Hong Kong, Chairman Kim visited the Hong Kong Monetary Authority (HKMA) and the Hong Kong Securities and Futures Commission (HKSFC) to discuss the impact of the eurozone fiscal crisis and policy responses.2. Meetings with executives of Korean businesses and financial companiesChairman Kim held meetings with executives of Korean businesses and financial companies in Bangkok (June 11) and Hong Kong (June 14) to listen to their difficulties in overseas operations and discuss how to successfully localize their business operations.*Please read the attached file for details.
Attachment 1