The Financial Services Commission announced that a set of measures intended to enhance foreign investors’ access to domestic capital markets will take effect from December 14, 2023. The measures include the abolishment of foreign investors’ prior registration requirement, the easing of reporting duty for foreign securities firms in their use of omnibus account, and the expanded scope of foreign investors’ OTC transactions eligible for ex post reporting. Meanwhile, the mandatory English disclosure rule for listed companies will phase in from January 1, 2024.

First, the foreign investor registration system, which mandated foreign investors to register with the Financial Supervisory Service (FSS) prior to making investment in domestic stock markets, will be abolished. As the revised Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) takes effect from tomorrow (December 14), foreign investors are able to open investment accounts in domestic capital markets either with a legal entity identifier (LEI, for corporate investors) or a passport number (for individual investors) without going through a prior registration process. Those that have already been assigned a foreign investor registration number can still use their identifier so as to help to minimize causing unnecessary inconvenience.

Second, the use of omnibus account for foreign securities firms will be made more convenient. Although the omnibus account system has been available since 2017, it has never been utilized by foreign securities firms due to the heavy burden of reporting rule, which required them to instantly report each end-investor’s completed transactions at the moment of settlement (T+2). Starting from tomorrow, their reporting cycle will be eased to once every month. Under the revised rules on financial investment businesses, foreign securities firms will be required to report—as of the last day of every month—each end-investor’s transaction details to an omnibus account operating domestic securities firm until the 10^th day of the following month. Then, the domestic securities firm will need to report their transaction details to the FSS until the 15^th day of the same month. The authorities expect that this will help to facilitate foreign investors’ use of omnibus account and enhance their access to domestic stock markets.

Third, foreign investors’ convenience in over-the-counter (OTC) transactions will be increased. Until now, foreign investors’ OTC transactions were subject to a preliminary examination by the FSS, except for a limited scope of transaction types allowed on an ex post reporting basis. Starting from tomorrow, the scope of foreign investors’ OTC transaction types permitted on an ex post reporting basis will be expanded, which will help to mitigate their reporting burden and enhance convenience in foreign investors’ OTC transactions.

The government and the related organizations plan to set up and operate a joint inspection team to ensure that the changed rules can firmly take root in the market. An updated version of foreign investors’ guide will also be provided via FSS’s website.

* Please refer to the attached file for details.