Press Releases - Financial Services Commission

Press Releases

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May 02, 2022

FSC Unveils Guideline on Securities Businesses Dealing with Fractional Investment

The FSC introduced a guideline on the recently expanding form of securities business dealing with fractional investment on April 28 in order to make available information about the applicability of the Financial Investment Services and Capital Markets Act (FSCMA) and things needed to be considered for business activities. Decisions regarding whether a fractional investment product qualifies as a financial security are determined on a case-by-case basis, taking into account various factors related to investments and transactions such as the contents of the contract and the terms of use in a comprehensive manner. Regardless of the method, formality or technicality in indicating the rights, decisions will be based on the actual contents of the indicated rights and the authorities will interpret and apply the rules in line with the purpose of the financial securities regulations. Business entities with a plan to issue and distribute fractional investment products that are considered as securities should abide by the FSCMA and all other relevant laws. However, a provisional regulatory exemption can be granted through the financial regulatory sandbox program when their innovativeness and necessity (utility) are particularly recognized and when they have established an investor protection system as well as a system for operating separate markets for the issuance and distribution of fractional investment products. Background Fractional investment is generally known as investing in a share of the ownership right for real-life assets, etc., and most investors perceive that they actually own a piece (fraction) of the ownership right through their investments. When investors have direct ownership,they can earn profits generated from the asset in possession and can exercise their rights including property rights regardless of the success or failure of the fractional investment business. The trading of real-life assets in this regard is not subject to financial regulations in pri
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Apr 27, 2022

Entry Barrier for Investing in KONEX Market to be Lowered Significantly from End of May

The FSC approved a set of revisions for the operational, disclosure and listing rules of the Korea New Exchange (KONEX) market and the listing rules of the KOSDAQ market during a regular meeting held on April 27. The revision is a follow-up to the measures to revitalize the KONEX market introduced in Januarythis year for the purpose of facilitating the growth of SMEs through capital markets. Key Revisions (Lowering Entry Barrier for Retail Investors) The revised measures abolish the minimum deposit rule requiring retail investors to deposit at least KRW30 million as well as the rule that requires investors to open up an exclusive account for small-sum investmentsfor making investments in the KONEX market. As such, retail investors will be able to invest in the KONEX market more at will. However, as the KONEX market is being regulated at a minimum level such as its rules on listing eligibility review, disclosure, etc., securities firms should notify investors who are new to investing in the KONEX market about the need to practice caution when making investments. (Facilitating Processes for KONEX-to-KOSDAQ Listing) In order to facilitate KONEX-listed companies to more easily move to KOSDAQ listing after going through a certain period of preparation, the revised measures partially ease the current financial requirements of KONEX-listed companies for being eligible for the fast track scheme.The revision also introduces new KOSDAQ listing tracks that are based on the KONEX-listed companys market capitalization and liquidity assessment but do not consider its financial conditions such as sales amount and operating profit. (Easing Rules on the Designated Advisor System)In order to help reduce burdens of KONEX-listed firms in maintaining their listing status and to promote KONEX market transactions, the revised measures limit the currently unending period required to have a designated advisor filing disclosure reports on behalf of the listed company to one year,thereby alle
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Apr 15, 2022

FSC Introduces Improvements to Cloud Computing and Network Separation Rules in Financial Sector

The FSC unveiled its plans to improve regulations on cloud computing and network separation in financial sectors on April 14. The financial industry has been raising concerns about difficulties in adopting and using new digital technologies as a result of excessive regulations on cloud computing and network separation. Therefore, in order to support the financial sectors efforts for digital transformation in a stable manner, the authorities have introduced a set of measures to improve regulations on cloud computing and network separation. On cloud computing, the changes will focus on (a) clarifying the scope (and types) of work that can make use of cloud computing, (b) overhauling the usage process to remove redundancies and similarities and (c) making a transition from the current prior reporting requirement to ex post facto reporting. On network separation, the uniform application of the network separation rules will be eased in stages starting with the development and test servers. Background The acceleration of digital transformation in financial services has been pushing up demand for new digital technologies such as cloud computing, big data analytics and artificial intelligence (AI). However, there have been continuous complaints from the industry that the current regulations on data security in the financial sector regarding cloud computing and network separation have been too strict, thereby hindering the adoption and use of new digital technologies. In order to address this issue, after taking into account various opinions from the financial industry,the FSC has prepared the measures for improving regulations on the use of cloud computing and network separation to promote digital innovation in the financial industry. Overview of Current Regulation on Cloud Computing and Network Separation I. Regulation on Cloud Computing (Usage Status) The financial sector has thus far been using cloud computingfor back office (non-essential types of work) purposes includi
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Apr 13, 2022

FSC Announces Screening and Licensing Plan for MyData Service Providers in 2022

The FSC announced this years screening and licensing plan for financial MyData service providers on April 13. The authorities will continue to provide support for innovative firms to enter the market in order to further promote the growth of MyData services as a key driver of growth in the financial industry. For consumer protection purposes, however, the authorities will strengthen pre-licensing control measures as well as post-licensing management. In order to provide more in-depth screening and consultation, the authorities will accept applications en bloc periodically at the end of every quarter and have them screened by external experts. Background MyData business came under the purview of the law with the revision to the Credit Information Use and Protection Act in February 2020 which aimed to strengthen personal data privacy and securityand ensure the stable provision of services.From an early stage, the authorities minimized the entry barrierto promote access of innovative firms while adopting a licensing system to help establish a sound MyData business ecosystem. Since the first batch of MyData service providers that were granted full license for operation on January 27, 2021, a total of 56 MyData service providers have been given full licenses with 45 MyData services being launched so far. However, there still exists demand for additional licensing by small-scale fintechs and financial companies. Therefore, after operating a taskforce composed of relevant experts,the authorities held discussions on MyData licensing plan for future as well as issues to consider for further screening and licensing. Screening and Licensing Plan for MyData Service Providers in 2022 The licensing requirements for new entrants will be maintained at the current level to promote a continuing provision of innovative services by new entrants that are equipped with creative ideas. Nonetheless, improvements will be made in the following areas for the purpose of consumer protection giv
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Apr 13, 2022

Household Loans, March 2022

The outstanding balance of household loansacross all financial sectors fell KRW3.6 trillion at the end of March 2022, continuing to show a steady decline as the pace of slowdown has picked up compared to the previous month (down KRW0.3 trillion).The balance of household loans in March grew 4.7 percent from a year ago, steadily declining from the second half of the previous year. By type, mortgage-backed loans in March increased KRW3.0 trillion,growing at a slightly faster rate compared to the previous month (up KRW2.6 trillion) but continuing to maintain the pace of a slowdown since the second half of the previous year. Other types of loans including unsecured loans fell KRW6.6 trillionled by the banking and mutual finance sectors, showing an accelerated pace of slowdown from the end of the previous year. By sector, the balance of household loans dropped KRW1.0 trillion in the banking sector as mortgage-backed loans went up KRW2.1 trillionbut other types of loans including credit-based loans fell KRW3.1 trillion.The nonbank sector saw a drop of KRW2.6 trillion, showing an accelerated rate of slowdown compared to the previous month (down KRW0.1 trillion) led by the mutual finance sectors. The trends in household loans continue to be on a stable path as the balance of household loans declined KRW3.6 trillion in March 2022 and fell considerably from the previous month. Although mortgage-backed loans increased KRW3.0 trillion, other types of loans including unsecured loans dropped significantly (down KRW6.5 trillion) due to increases in borrowing rates, an expanded application of the debt service ratio (DSR) rule on individual borrowers and a slowdown in housing transactions,leading to an expansion in the pace of slowdown in aggregate terms. The financial authorities will continue to closely monitor trends in household loans in order to help maintain its growth pace at a stable level. * Please refer to the attached PDF for details.
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