Press Releases - Financial Services Commission

Press Releases

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Jun 18, 2020

Vice Chairman Holds Meeting to Review Risks in Financial Sectors

Vice Chairman Sohn Byungdoo held a meeting to review market conditions and risk factors in the financial industry on June 18 with experts from the public and private sectors.The following is a summary of Vice Chairman Sohn’s remarks.(END-OF-QUARTER-EFFECT IN JUNE) In March, the global spread of the COVID-19 infection, rising instability in financial markets and the end-of-quarter shortage in capital supply led to difficulties in the corporate bond and short-term money markets. In response, the government launched various financial support and liquidity injection measures, including a bond market stabilization fund and an SPV to purchase lower-rated corporate bonds and CP. As a result, the markets have begun to show signs of recovery with yield spreads growing at a slower rate.However, blue chip companies and non-blue chip companies face different conditions for issuing bonds. In June, a total of KRW68 trillion worth of corporate debt will be up for maturity (KRW12.2 trillion in corporate bonds and KRW55.5 trillion in CP and short-term debt). About 90 percent of them are high rated debt and will face not much obstacle in meeting debt obligation. The securities firms with margin call obligations related to equity-linked securities are maintaining foreign currency liquidity in case of global stock price fall. Thus, the liquidity problem is not a major concern.The government will temporarily ease the liquidity requirements of repo sellers to prevent a surge in cash demand at the end of June. The government will also provide support through policy banks’ corporate bond and CP purchase programs.(INVESTOR PROTECTION WITH DERIVATIVES PRODUCTS) With investors’ interest in derivatives products growing, the volumes of FX margin trading and CFD transaction by retail investors have increased significantly this year. For FX margin trading, the proportion of retail investors is very high at about 92 percent, despite the implementation of various measures, such as stricter ru
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Jun 15, 2020

FSC Chairman Vows Support for Auto Industry

FSC Chairman Eun Sung-soo visited Korea Fuel-Tech Corporation on June 15 in Seongnam-si and held talks on ways to provide effective assistance to the car and auto parts industries struggling with the pandemic-driven economic crisis.The following is a summary of Chairman Eun’s remarks.(GOVERNMENT’S RESPONSE TO PANDEMIC) The government has taken multipronged approaches to stabilize markets and provide businesses with financing assistance. The KRW175 trillion-plus financial support package consists of the bond market stabilization fund, P-CBO support for corporate bond markets, emergency loans and preferential guarantees. The KRW40 trillion key industry stabilization fund has been launched which will begin providing support in June. Also, a special purpose vehicle in the amount of KRW10 trillion will be ready for purchasing lower-rated corporate bonds and commercial paper as soon as the 3rd supplementary budget is passed at the National Assembly.Backed by these measures, about KRW42.5 trillion in SME loans has been issued between January and May 20 this year, which amounts to approximately 84 percent of total SME loans issued last year. Also, instability in the stock markets and corporate bond market has been largely subsided.(SUPPORT FOR AUTO INDUSTRY) The government has made available about KRW5 trillion worth of financial support to the auto industry since February. However, the entire industry is struggling with a sharp fall in exports and shortage of work due to the shock in the global supply chain and overseas factory shutdowns.In particular, SMEs and middle market enterprises are burdened with additional hardship as they face limited access to loans due to thin credit records.(FURTHER PLANS) In order to minimize the pandemic’s damaging effects on the auto industry, close cooperation should take place between the government, industry and financial institutions. While promoting ways to help businesses to boost credit standing on their own, the government wil
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Jun 09, 2020

Vice Chairman Vows to Maintain Close Market Monitoring and Risk Management

FSC Vice Chairman Sohn Byungdoo held the 7th financial risk assessment meeting on June 9 to assess the financial market conditions and check the implementation status of the COVID-19 financial support.The following is a summary of Vice Chairman’s remarks.(CURRENT SITUATION) There are continuing signs of market stability with stock prices recovering to pre-COVID-19 levels and the yield spreads in corporate bond and CP markets stabilizing. In June, about KRW12 trillion of corporate bonds and KRW53 trillion of CP and short-term bonds are up for maturity. Given the recent improvement in the market conditions and that most of them have AA- or A1 rating, there will not be much difficulty for businesses to raise capital through issuing or refinancing bonds.For ‘fallen angel’ companies, various supports are available from the bond market stabilization fund, corporate bond takeover programs by policy banks and the special purpose vehicle aimed at purchasing corporate bonds and CP.Securities firms ran into liquidity problems in March-April in the process of fulfilling their purchase agreements for asset-backed commercial paper, but the problems large subsided in May with the easing of credit crunch in the short-term money markets.(SUPPORTING ECONOMIC RECOVERY) The Financial Stability Board stressed the important role of the financial sector in supporting the recovery efforts from the pandemic-induced economic crisis while suggesting regulatory flexibility to help facilitate banks’ lending function. In this regard, the FSC introduced in April its plans to temporarily ease financial regulations, including the early adoption of Basel III credit risk framework for banks and the easing of rules on banks’ liquidity coverage ratio. Among them, 21 measures have now gone into effect with nine others expected to go into effect in July.FINANCIAL SUPPORT PROVIDEDBetween February 7 and June 5, a total of KRW124.7 trillion (1.53 million cases) in loans and guarantees as well as l
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May 27, 2020

2020 Online Korea Fintech Week

The 2nd Korea Fintech Week will be held virtually starting at 10 am on May 28. It is organized into five sessions, and the virtual exhibitions are open to everyone for viewing at free of charge via www.fintechweek.or.kr/2020. SCHEDULE(OPENING SESSION) Welcoming remarks by FSC Chairman Eun Sung-soo and congratulatory remarks by key dignitaries including Lord Mayor of the City of London William Russell and Standard Chartered CEO Bill Winters(SPECIAL SESSIONS) Presentations and seminars on ‘open innovation,’ showcasing major policy and industry trends at home and abroad► FSC: Fintech in Korea and digital transformation strategy in financial sectors► KFTC: Open banking in Korea► FSI: Financial data security in the 4th industrial revolution► VISA-Fintech Center Korea: Sharing successful collaboration lessons between global financial company and fintech► MAS: Future of fintech in post-COVID-19 era► Stone Chalk: Fintech trends in Australia► World Bank: Digital finance for crisis response and economic development – Role of the WB► KPMG: Korean fintech industry in 2020 policy trends► KOSCOM: Financial cloud computing and compliance in financial services► FSI: Security evaluation trends of cloud service providers in financial sectors► Regtech suptech showcases(VIRTUAL EXHIBITION HALLS) The six virtual exhibition halls are organized into a fintech ecosystem hall, a financial enterprise hall, a fintech start-up hall, a fintech scale-up hall, a big tech hall and a global enterprise hall, participated by about 150 entitiesTo help attract investment for the K-Growth fund, a major source of fintech investment operated by the Korea Growth Investment Corporation, a shortcut to fintech investors’ relations will be placed on top of the main page.(ONLINE JOB FAIR) HR managers from 35 financial companies and fintech firms will provide information about job openings, nature of work and qualities they look for in new hires. About a dozen companies have plans t
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May 20, 2020

Government Unveils Plans to Create SPV to Support Corporate Bond and CP Markets

The government announced on May 20 specific plans to create a special purpose vehicle (SPV) aimed at supporting the corporate bond and commercial paper markets.BACKGROUNDThe conditions surrounding the corporate bond market hit by COVID-19 have improved somewhat recently with the government setting up a bond market stabilization fund (KRW20 trillion) and providing support for the issuance of primary collateralized bond obligations (KRW6.7 trillion) and corporate bonds (KRW4.1 trillion). As a result, the total amount of newly issued blue-chip corporate bonds rebounded in April. However, the bond market still remains weak for lower rated corporate bonds with A or below ratings, and there is stronger preference for short-term bonds. Against this backdrop, the government announced on April 22 its plans for creating an SPV to purchase lower-rated corporate bonds and commercial paper.SPV MANAGEMENTThe government, the Bank of Korea and the Korea Development Bank will set up a KRW10 trillion SPV to help stabilize the corporate bond market, with the possibility of increasing its size up to KRW20 trillion.(FUNDING SOURCES) KRW1 trillion (10%) equity capital from KDB, KRW1 trillion (10%) in subordinated loans from KDB and KRW8 trillion (80%) in primary loans from BOK(PURCHASING TARGETS) AA to BB rated corporate bonds A1 to A3 rated CP and short-term debt with maturity of up to 3 yearsThe SPV purchasing program will mostly focus on A rated bonds but will also buy ‘fallen angels,’ junk-rated bonds which were downgraded from investment ratings due to Covid-19.Companies with their interest coverage ratio of 100% or less for two consecutive years will be precluded from the purchasing program.(PURCHASING LIMITS PRICES) In order to fulfill the purpose of market stabilization, purchasing limits will be established within 2 to 3 percent of the total fund available from the SPV purchasing program for each individual company and business sector.To encourage market-based capital raisin
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May 19, 2020

Asia Region Funds Passport to be Launched on May 27

The government approved the revisions to the enforcement decree of the Financial Investment Services and Capital Markets Act on May 19 in preparation for the implementation of the Asia Region Funds Passport (ARFP) on May 27.KEY PROVISIONSThe revisions establish the following provisions for the registration and operation of passport funds.► REGISTRATION FOR PASSPORT FUNDS: Publicly offered local funds with (a) at least USD500 million in assets under management and USD1 million or more in capital, and (b) at least two board members with 5 years or more of management experience in the financial sector can apply to be registered as passport funds.Registered passport funds will be operated through securities and short-term financial instruments, sales of derivatives and securities lending agreement.► REDEMPTION DELAY AUDIT RULES: (a) A redemption delay is allowed when the amount of redemption requests surpasses 10 percent of the fund’s net asset value, (b) Small size funds (total assets of KRW30 billion or less) will be subject to an audit without exception► SALE REGISTRATION OF FOREIGN PASSPORT FUNDS: Foreign passport funds registered at another member economy will be available for sale in Korea through a streamlined process. Foreign passport funds sold in Korea will be subject to the same rules, regulations and investor protections as the publicly offered local funds.SCHEDULEThe revisions will become effective on May 27. The guidelines from the Korea Financial Investment Association and information about the registration process and relevant forms will be distributed to help facilitate the use of ARFP.* Please refer to the attached PDF for details.
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May 12, 2020

Vice Chairman Urges Preventive Measures as Banks Ready to Accept Loan & Relief Payment Applications

FSC Vice Chairman Sohn Byungdoo held a financial risk assessment meeting on May 12, and discussed the second phase financial support program for small merchants and the preparations for emergency relief payments and key industry stabilization fund.The following is a summary of Vice Chairman Sohn’s remarks:(DOMESTIC FINANCIAL MARKETS) The financial markets show signs of stability. Liquidity shortages in the corporate bond market and the short-term money markets have subsided following the policy responses to purchase commercial paper and issue primary collateralized bond obligations. The government will closely monitor markets and take prompt measures when necessary.(2ND PHASE FINANCIAL SUPPORT FOR SMALL MERCHANTS) The government and the financial institutions will work to swiftly provide the 2nd phase financial support to small merchants beginning on May 18, which amounts to KRW10 trillion for about one million business owners. With 95 percent of loans guaranteed from the Korea Credit Guarantee Fund, the lending institutions will face reduced burdens.(EMERGENCY RELIEF PAYMENTS) On May 18, banks will begin accepting applications for the COVID-19 emergency relief payments for households. The relevant institutions, local branches and individuals should adhere to the preventive measures in order to prevent the spread of virus.(KEY INDUSTRY STABILIZATION FUND) The preparations to launch the key industry stabilization fund have been taking place. The designated key industries are vital to maintain the global competitiveness. This stabilization fund will help the key industry enterprises and their subcontractors weather the pandemic-caused hardship while protecting jobs for their employees.The government will work to overcome the pandemic-driven economic crisis while supporting businesses to retain jobs and maintain their global competitiveness.FINANCIAL SUPPORT PROVIDEDBetween February 7 and May 8, a total of KRW87.0 trillion (1,044,000 individual cases) in loans and gu
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Apr 22, 2020

Government Announces KRW40 Trillion Fund to Support Key Industries

The government introduced measures to establish a KRW40 trillion fund to support key industries and help businesses retain jobs on April 22. In addition, the government will help provide more liquidity to the businesses in need through a KRW35 trillion increase in the emergency financial support package.KEY PROVISIONSI. ESTABLISHING A KRW40 TRILLION+ STABILIZATION FUND FOR KEY INDUSTRIES► SIZE: A KRW40 trillion+ new stabilization fund will be established to support key industries, which will be operated by the Korea Development Bank. The fund will be raised by issuing state guaranteed fund bonds. In addition, private funds and special purpose vehicles will also contribute to the stabilization fund.► TARGET: The fund will support key industries that have significant impact on employment and the real economy, including airline, shipping, shipbuilding, auto, general machinery, electric power and communication industries.► CONDITION: (a) The autonomy in business management will be guaranteed in principle based on the condition of self-rescue efforts. (b) Businesses will be required to work on maintaining employment when receiving the support. (c) Businesses will be subject to limitations in executive compensation, dividend payouts, and share buybacks. (d) The support will be provided in a way that allows sharing of benefits from business normalization in the future.► OPERATION: (a) Support will be provided in diverse ways through loans, payment guarantees and investments according to specific industry and business needs. (b) Investment and credit extension to related funds and special purpose vehicles will be permitted to promote inputs from private sector funding channels and their know-hows. (c) A council will be set up to ensure professionality, accountability and transparency of the fund management.II. EXPANDING EMERGENCY FINANCIAL SUPPORT PACKAGE BY KRW35 TRILLION► FINANCING SUPPORT FOR SMALL MERCHANTS (KRW10 TRILLION): The 1st stage financing support mad
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Apr 20, 2020

Plans for Temporary Easing of Financial Regulations in Response to COVID-19

The financial authorities announced on April 17 a set of temporary deregulatory measures on financial institutions’ capital adequacy, liquidity and asset quality requirements to help boost their financing capacity amid the COVID-19 crisis. The deregulatory measures are expected to pave the way for financial institutions to play a more active role in providing support to the real economy.BACKGROUNDThe international society including the G20 and the Basel Committee on Banking Supervision recognized the need for a more flexible application of financial regulations in response to COVID-19. The adoption of the Basel III standards in the aftermath of the 2007-2008 financial crisis has boosted the stability of financial institutions in crisis situations. But it also had an effect of constraining their ability to flexibly respond to crisis situations. Against this backdrop, the Financial Stability Board recently made a recommendation for more flexible application of regulations.In response to COVID-19, the Korean government has made available more than KRW100 trillion in financing support via financial institutions. The financial institutions at the forefront of delivering this emergency support package to businesses have been requesting an easing of such regulations so that they can increase their financing capacity to help support the real economy.TEMPORARY EASING OF FINANCIAL REGULATIONSThe deregulatory measures will be based on the four key principles—necessity, temporariness, promptness and effectiveness.I. REGULATIONS ON CAPITAL ADEQUACY► CONTRIBUTION TO STOCK MARKET STABILIZATION FUND: Banks, securities companies and insuance companies that are making contributions to the stock market stabilization fund will see lower risk weights for the amount of contribution they make.(Banks) Under the current regulations, banks’ investment in funds that have listed stocks as underlying assets should be assigned a 300 percent risk weight in principle. However, banks will b
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Apr 17, 2020

Financial Authorities to Temporarily Ease Regulations on Capital and Liquidity Requirements

FSC Vice Chairman Sohn Byungdoo held a meeting on April 17 via conference call to check the delivery of the government’s COVID-19 emergency support package and financial market stabilization measures.The following is a summary of Vice Chairman Sohn’s remarks:► STRONG COOPERATION: The FSC and the FSS along with all other relevant institutions will closely cooperate in working to prevent bankruptcies and job lossess. ► ENSURING SEAMLESS IMPLEMENTATION: For guaranteed loans, the guarantee institutions had different standards for offering deferments on the principal payment. Due to an improvement in the standards, this discrepancy has been removed.► EASING REGULATIONS: In order to make sure that financial institutions providing the COVID-19 emergency support package do not face liquidity shortages, the government will temporarily ease regulations on the capital and liquidity requirements, while also working to improve the performance assessment measures for public financial institutions.FINANCIAL SUPPORT PROVIDEDBetween February 7 and April 13, a total of KRW40.9 trillion (488,000 individual cases) in loans and guarantees as well as loan and guarantee extensions were provided to the SMEs, small merchants and self-employed business that have been hit by the spread of COVID-19.► FINANCING BY TYPE: KRW19.6 trillion (352,000 cases) in new loans and guarantees, KRW19.9 trillion (120,000 cases) in maturity extensions and deferred payments, and KRW1.4 trillion (16,000 cases) in export-import credit finance, discounted interest rates and late fees and deferment of interest payment► FINANCING BY TARGET: KRW19.4 trillion (424,000 cases) to small merchants, KRW17.1 trillion (64,000 cases) to SMEs and KRW4.5 trillion (594 cases) to middle market enterprises► FINANCING BY INDUSTRY: KRW5.6 trillion (56,000 cases) to wholesale businesses, KRW3.8 trillion (111,000 cases) to restaurant businesses and KRW3.6 trillion (82,000 cases) to retail businesses► FINANCING BY PRO
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Apr 08, 2020

Strengthening Support for Vulnerable Debtors

The government unveiled its plans to strengthen support for vulnerable debtors at the 4th Crisis Management Meeting held on April 8. The government will help set up a KRW2 trillion new facility at the Korea Asset Management Corporation, which will be used to purchase overdue debts and help alleviate debt burdens of vulnerable debtors.BACKGROUNDThe prolonging economic slowdown caused by the COVID-19 has led to unpaid leaves and loss of work opportunities for many individuals, which may contribute to an increasing number of cases where individuals are unable to service their debts. Against this backdrop, the government introduced the plans to help prevent vulnerable debtors from turning into delinquent debtors by expanding the eligibility of pre-workout programs by individual financial institutions, strengthening the debt adjustment support provided at the Credit Counseling Recovery Service and establishing a new facility for purchasing overdue personal debts.KEY MEASURESI. PRE-WORKOUT PROGRAM FOR DEBTORS WITHOUT MULTIPLE DEBTSFrom the end of April, vulnerable debtors whose income levels have fallen due to COVID-19, that have difficulties servicing household debts and are facing a risk of debt overdue may use pre-workout programs offered by individual financial institutions. A 6- to 12-month deferment of principal payment will be provided by all financial institutions until the end of this year. The pre-workout programs may be extended thereafter if deemed necessary.II. DEBT ADJUSTMENT PROGRAM FOR DEBTORS WITH MULTIPLE DEBTSFrom the end of April, multiple-debt holders whose income levels have fallen due to COVID-19, that have difficulties servicing debts and are facing a risk of debt overdue may use debt adjustment programs offered by the Credit Counseling Recovery Service. The CCRS’ debt adjustment programs offer up to one year of deferment of principal payment for at-risk debtors (including short-term debtors of less than three months) as well as debt reduction fo
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Apr 06, 2020

Current Situation in Financial Markets and Government's Policies

WHAT ABOUT THE GOVERNMENT’S SUPPORT FOR LOW-GRADE CORPORATE BONDS AND COMMERCIAL PAPER NOT COVERED BY THE BOND MARKET STABILIZATION FUND?The bond market stabilization fund is aimed at supporting the issuance of investment-grade corporate bonds. If the Bank of Korea begins to offer lending support for non-bank financial institutions, it is expected to take some loads off the bond market stabilization fund, which may create some room for considering the purchase of certain types of low-grade corporate bonds as well.For low-grade corporate bonds and commercial paper, other financing support programs such as primary collateralized bond obligations (P-CBOs) are available through policy banks. It is the government’s policy to prevent bankruptcies due to a temporary liquidity shortage from COVID-19.PRIOR TO THE PROVISION OF FINANCING SUPPORT TO LARGE COMPANIES, WHAT SELF-RESCUE MEASURES SHOULD HAVE BEEN TAKEN?For businesses eligible to apply for the emergency support package, the government will make available financing support to all businesses regardless of their size or sector. However, the KRW100 trillion package cannot possibly cover all business financing demands.Unlike small merchants and SMEs, many large companies still remain capable of financing their businesses through market mechanisms. The corporate financing support programs in the past also required self-rescue efforts by large companies, including a requirement to pay a certain portion for refinancing their debt and to buy back a portion of securities in P-CBO programs.If it becomes necessary in the future, the government will draw up plans to further reduce the financing burdens for large companies.HOW DOES THE SUPPORT PACKAGE AFFECT THE SOUNDNESS OF THE FINANCIAL INSTITUTIONS?The soundness of the financial institutions remains strong currently. The banks’ BIS ratio and bad debt ratio improved compared with the previous crisis levels. In the process of the implementation of the emergency financial su
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Mar 27, 2020

Vice Chairman Emphasizes Importance of Effective Implementation of COVID-19 Financial Support

FSC Vice Chairman Sohn Byungdoo held a meeting on March 27 via conference call to examine the implementation of the government’s COVID-19 emergency support package and financial market stabilization measures.The following is a summary of Vice Chairman Sohn’s remarks:► FINANCING SUPPORT: Low-rate loans (1.5%) at local banks as well as maturity extensions on existing loans and deferment of interest payments will be available through all financial institutions beginning on April 1.► ON-SITE COMMUNICATION: Beginning on April 6, the FSC’s emergency financial situation room along with other relevant institutions will operate a regular on-site communication and inspection channel through conference calls or on-site visits in order to help resolve difficulties on the ground.► MARKET STABILIZATION FUNDS: On March 24, the size of the initial capital call has been decided at KRW3 trillion to launch a bond market stabilization fund, which will be expanded up to KRW20 trillion afterwards. The corporate bond purchase will start as early as April 2. A stock market stabilization fund in the amount of KRW760 billion was launched on March 25 by the Korea Exchange, the Korea Financial Investment Association, the Korea Securities Depository and the Korea Securities Finance Corp. In addition, KRW10 trillion more will be made available by the financial institutions in the private sector in the second week of April.► SHORT-TERM MONEY MARKETS: Between March 24 and 26, the Bank of Korea and the Korea Securities Finance Corp. made available approximately KRW3.5 trillion in short-term liquidity to the securities companies. On March 30, the policy banks will begin purchasing commercial paper, electronic short-term bonds and short-term credit bonds. A CP purchasing operation will be undertaken collectively by the Korea Development Bank and the Korea Credit Guarantee Fund.FINANCIAL SUPPORT PROVIDEDBetween February 7 and March 24, a total of KRW13.4 trillion (152,000 individual case
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Mar 24, 2020

Measures to Stabilize Financial Markets

The government unveiled the financial market stabilization measures on March 24 to help provide sufficient liquidity to businesses and deploy market stability tools to absorb shocks in the financial markets amid the spread of COVID-19.In order to address financing difficulties and help restore stability in the financial markets, the measures will increase the financing support package from KRW50 trillion to more than KRW100 trillion. This includes financing support through policy banks in the amount of KRW58.3 trillion and KRW41.8 trillion funds to help restore stability in the country’s bond market, stock market and short-term money markets.FINANCIAL MARKET CONDITIONSThe concern over a global economic slowdown due to the spread of COVID-19 has brought market volatility in the global financial markets, thus limiting corporate financing channels. From the beginning of March, stock prices in major economies plunged and the won-dollar exchange rate spiked due to a strong dollar.Amid rising uncertainties surrounding the COVID-19, market anxiety has expanded to the corporate bond market and short-term money markets.Unlike the past financial crises, the downturn in the financial markets today started from the real economy — an abrupt slowdown in consumption, production and investment, a breakdown in global supply chains, and a drop in global trade.Due to the decline in domestic demand, a contraction in the real economy and financial market anxieties, it remains difficult to accurately predict the ripple effects of the current economic slowdown caused by COVID-19. Thus, preemptive and bold responses are required to bring stability to the markets.KEY MEASURESI. FINANCING SUPPORT FOR BUSINESSES: KRW58.3 TRILLIONA total of KRW 29.2 trillion in financing support for SMEs and small merchants will be provided.► KRW12.0 trillion in emergency financing support for small merchants► KRW5.5 trillion in special guarantees for SMEs and small merchants► KRW3.0 trillion in full
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Mar 13, 2020

Government Unveils Stock Market Stabilization Measures

The Financial Services Commission decided to impose a ban on stock short-selling in the KOSPI, KOSDAQ and KONEX markets for a period of six months from March 16 to September 15. During the six-month period, the current limits on stock buybacks will also be lifted for listed companies as shown below. The Korea Exchange may ease the rules upon approval from the FSC.In order to prevent excessive offsetting trading by stock companies, the minimum requirement for collateral coverage ratio for stock companies will be lifted.* Please refer to the attached PDF for details.
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Mar 10, 2020

Government Strengthens Short-selling Rules

The government will tighten regulations on stock short-selling for three months beginning on March 10 in response to the recent market volatility. While closely monitoring market developments, the government will continue to take appropriate measures based on contingency plans.MEASURES TO TIGHTEN SHORT-SELLING RULESIn March 2017, the government introduced the designation scheme for overheated short-selling stocks, which began to prohibit for the next trading day the short-selling of stocks with an abnormal increase in short-selling trading volume and a price falling rate.The government will lower the bar for designating such overheated short-selling stocks. In the KOSPI market, an issue will be designated as an overheated short-selling stock if it has a price falling rate of 5% or higher and a short-selling trading volume of 3 times above the average (currently 6 times above the average). In KOSDAQ, the standard for short-selling trading volume will be lowered from 5 times above the average to 2 times above the average.Stocks with price falling rate of 20% or more will be designated as overheated short-selling stocks if the increase in short-selling trading volume is 2 times and 1.5 times the average in the KOSPI and KOSDAQ market, respectively.The period of the short-selling ban on the designated stocks will be extended from one to 10 trading days (2 weeks).* Please refer to the attached PDF for details.
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Mar 03, 2020

2020 Policy Plans to Improve Competitiveness and Soundness of Financial Industry

The FSC announced its plans to improve the competitiveness and soundness of the financial industry on March 2, 2020. The plans focus on boosting the competitiveness of the financial industry, facilitating corporate financing, promoting corporate responsibilities to ensure consumer trust in the financial industry, and strengthening the management of financial soundness.KEY POLICY PLANS1. BOOSTING COMPETITIVENESS OF FINANCIAL INDUSTRYThe government will lower entry barriers to encourage innovative firms to enter the markets and work to modify regulations in business operation to create a more dynamic business environment.► SMALL LICENSES : Facilitate the entry of small-sized and specialized financial businesses in insurance, banking and credit lending sectors by subdividing their business license units and lowering their entry barriers.► INDUSTRY COMPETITIVENESS EVALUATION: Resume sectoral evaluation of competitiveness in banking, insurance and financial investment sectors, and apply the evaluation process for credit card and credit bureau businesses.Improve the effectiveness of the competitiveness evaluation from a consumer’s perspective by replacing the current sectoral evaluation system with a functional one.► PLATFORM BUSINESS: Review the boundaries in which financial companies can operate platform businesses and work to permit their operation of platform businesses.► DATA BUSINESS FOR CREDIT CARD COMPANIES (H1 2020): Revise the relevant enforcement decrees and regulations to permit credit card companies to operate MyData business and individual business credit bureau, and allow credit card companies to use anonymized or pseudonymized personal data for financial advising services► VENTURE INVESTMENT (Q1 2020): Modify regulations to promote financial companies’ investment in fintechs and other innovative venture start-ups to promote cross-sector convergence and collaboration, while working to provide tailored financing support through accelerator prog
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Feb 17, 2020

2020 Work Plan Focuses on Financial Innovation to Support Innovative Businesses

The Financial Services Commission along with other economic ministries presented the 2020 Work Plan on February 17, 2020. The FSC has outlined 10 key policy tasks for this year, which include a) redirecting capital flow toward SMEs and start-ups with innovative technologies and future growth potential, b) working on bold reforms in financial regulations while fostering convergence between new technologies and finance, and c) promoting inclusive finance and establishing a reliable financial safety net to support a comeback for those who have been discouraged by failed business attempts.The following are some of the key achievements so far in the areas of financial innovation.► Outstanding balance of movable asset lending by local banks doubled from KRW800 billion at the end of 2018 to KRW1.6 trillion by the end of 2019.► Outstanding balance of loans to SMEs by local banks increased from KRW610 trillion at the end of 2016 to KRW747 trillion by the end of 2019.► Number of newly listed companies on the KOSDAQ market rose from 82 to 108 between 2016 and 2019.2020 FINANCIAL POLICY TASKS1. REDIRECT CAPITAL FLOW TOWARD BUSINESSES FROM HOUSEHOLDS REAL ESTATES► Prevent capital concentration in the real estate market and introduce a new loan-to-deposit ratio which will encourage more corporate lending by financial companies.2. PROVIDE TARGETED SUPPORT TO 1,000 INNOVATIVE FIRMS► Select 1,000 innovative firms through a government-wide cooperation with other ministries and provide both financial and non-financial assistance in the amount of KRW40 trillion.3. ALLOW DIVERSE TYPES OF ASSETS TO BE USED AS COLLATERAL► Push for a revision of the Act on Security over Movable Property, Claims, etc. to introduce a lump-sum collateral system through which companies are able to collateralize a diverse set of assets including machinery, raw materials and inventory, and set up a movable collateral registry which will help collect collaterals and non-performing loans on behalf of f
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Dec 19, 2019

FSC Designates 9 More Financial Solutions as 'Innovative Financial Services'

The FSC designated nine additional financial solutions as ‘innovative financial services’ to be included in its regulatory sandbox program on December 18. The FSC has thus far designated a total of 77 ‘innovative financial services’ since the launching of financial regulatory sandbox in April this year.OVERVIEW OF NEWLY ADDED ‘INNOVATIVE FINANCIAL SERVICES’1. An over-the-counter bond trading platform providing retail investors with investment information about a variety of bonds, which will offer opportunities for small-amount investments and increase investor convenience (SK Securities)2. An automated stock lending borrowing transactions service, which is expected to contribute to the prevention of naked short-selling and failure to deliver securities (True Technologies)3. A customer oriented mobile appointment scheduling service using artificial intelligence, internet of things and big data, which provides information about the best time to set up an appointment at banks to avoid busy times while offering recommendations about financial products based on an analysis about customer’s consumption and investment patterns (NH Nonghyup Bank)4. A data analysis service using homomorphic encryption, which makes possible the coding of personal financial information stored in different financial institutions for analyzing purposes (Korea Credit Bureau)5. A digital real estate beneficiary distribution platform using a blockchain-based distributed ledger technology which offers retail investors an opportunity to make indirect investments in small-and medium-sized commercial real estate (Kasa Korea)6. A global money transfer brokerage service offering small-sum overseas remittance service providers an opportunity to easily find overseas partners, which is expected to ease consumer access and lower transaction costs (Hanpass)7. An online foreign stock gift card platform which allows small amount investment in shares of foreign stocks (Shinhan Investment)8 9. A sim
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Dec 12, 2019

FSC Finalizes Measures to Strengthen Investor Protection with High-risk Investment Products

FSC FINALIZES MEASURES TO STRENGTHEN INVESTOR PROTECTION WITH HIGH-RISK INVESTMENT PRODUCTSThe FSC announced a finalized plan to strengthen investor protection with high-risk investment products on December 12. Taking into account opinions from the financial industry, the finalized plan includes detailed measures and amendments to the original plan announced on November 14. SUPPLEMENTARY AMENDED MEASURESI. STANDARDS FOR ‘HIGHLY COMPLEX’ INVESTMENT PRODUCTS‘Highly complex’ investment products will be determined by the following criteria: (i) the complexity of structure in investment products, (ii) the amount of possible loss and (iii) whether investment products are listed or not. In the case that financial companies are unable to determine whether an investment product qualifies as ‘highly complex,’ they may request a decision by the Korea Financial Investment Association and the FSC.II. VALIDITY FOR CLASSIFICATION OF INVESTORS BY RISK APPETITEThe classification of investors by their risk appetite will be valid for 1-2 years, shorter than the previously announced 1-3 years, to ensure a more up-to-date classification.III. SCOPE OF UNFAIR SALES PRACTICEUnderestimating the riskiness of ‘highly complex’ investment products and selling them as mid-risk products will be classified as ‘unfair sales practice,’ which will face strict punishment.IV. CLARIFICATION OF BUSINESS SCOPE BETWEEN FUND MANAGERS AND SELLERS The scope of business between fund managers and sellers will be specified to determine whether a fund belongs to an OEM fund or not. A fund does not belong to an OEM fund if:(i) fund managers and sellers discuss investor demand and market trend without specifying investment targets or management methods;(ii) they exchange general information irrelevant to the establishment and management of funds; and(iii) they keep records of their discussion with relevant internal control V. LIMITED PERMISSION FOR BANKS TO SELL ‘HIGHLY COMPLEX’ INVESTMENT P
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