Press Releases - Financial Services Commission

Press Releases

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May 23, 2023

Authorities Hold Joint Conference and Pledge to Stamp Out Unfair Trading Activities in Capital Markets

The FSC held a joint conference on May 23 with the Financial Supervisory Service, the Korea Exchange and Seoul Southern District Prosecutors Office on the topic of stamping out unfair trading activities in capital markets. The conference was attended by experts from academia and research institutions. The heads of the FSC, FSS, KRX and the prosecutors office all agreed to boost inter-agency cooperation and expressed strong willingness to root out unfair trading activities in capital markets. The conference featured presentations on (a) ways to diversify sanctions on unfair trading activities, (b) measures to strengthen early detection mechanisms, (c) the KRXs handling of recent stock price manipulation cases and ways to improve in the future and (d) an overview on the current status of unfair trading activities in capital markets and how to handle from a judicial perspective. The following is a summary of FSC Chairman Kim Joo-hyuns opening remarks. Summary of FSC Chairmans Remarks In the wake of the recently uncovered unfair trading activities in our capital market and their damaging effects, relevant authorities have come together today to collectively seek measures to strengthen our response to fraudulent activities in capital markets. First, regarding the recent stock price manipulation cases, a joint investigation team made up of officials from the prosecutors office, the FSC and the FSS has already been set up, and it has been expanding its scope of investigation to all areas of suspicion. By thoroughly investigating and identifying illegal activities, authorities will make sure that those suspected of breaking laws are brought to justice. Second, authorities will promptly seek regulatory improvements in the current CFD (contract for difference) trading system on a separate track from the ongoing investigation. The improvement measures will include (a) providing more accurate investment information to investors, (b) resolving regulatory arbitrages vis--vis cred
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May 22, 2023

FSC Vice Chairman Visits Kyrgyzstan to Promote Cooperation in Financial Infrastructure Development

FSC Vice Chairman Kim So-young visited Kyrgyzstan on May 18-19 and attended the opening ceremony of a Korean financial companys local subsidiary and the business agreement ceremony on advancing Kyrgyzstans payment infrastructure. BNK Finance opening ceremony in Bishkek On May 18, Vice Chairman Kim attended the opening ceremony of BNK Capitals local subsidiary (BNK Finance) in Bishkek, Kyrgyzstan. As BNK Capitals entry in Kyrgyzstan marks the first such establishment by a Korean financial company, Vice Chairman Kim expressed his hope for its success in localization and building trust with local consumers and said that he expects the company to play a crucial role in laying a bridge between Korea and Kyrgyzstan and facilitating more Korean financial companies to expand their businesses to Kyrgyzstan in the future. Business agreement on advancing Kyrgyzstans payment infrastructure On May 19, Vice Chairman Kim attended the business agreement ceremony held between a Korean financial company and a fintech (BC Card and Smartro) and Kyrgyzstans public institution (Interbank Processing Center) for advancing Kyrgyzstans payment infrastructure. In an interview held with Kyrgyzstans state media at the agreement ceremony, Vice Chairman Kim said that he hopes that cooperation in transferring Koreas financial payment technology can contribute to the development of an advanced payment ecosystem in Kyrgyzstan. In the future, Vice Chairman Kim said that he hopes the two countries can expand cooperation in financial infrastructure development and increase exchange of relevant authorities. The business agreement on financial payment infrastructure with Kyrgyzstan marks the first such agreement with a Central Asian country, and this will help expand more opportunities for other Korean financial companies to expand their business activities abroad in Central Asia. The FSC plans to continuously engage with financial sectors and actively seek ways to more effectively support domestic finan
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May 18, 2023

Taskforce on Financial Data Holds Kick-off Meeting

The FSC launched a taskforce to improve regulations on financial data on May 18 with officials from financial companies, fintechs, private sector experts and relevant institutions participating. The taskforce aims to lay groundwork to promote data-driven innovation in financial sectors, strengthen the competitiveness of domestic financial industry and help to resolve the challenges faced by small- and medium-sized startups and venture businesses. After having a series of taskforce meetings, authorities plan to draw up and announce specific measures for improving rules on financial data in the third quarter of this year. The following are some of the key task items discussed at the meeting. Facilitating use of pseudonymized data by small- and medium-sized fintechs - Review ways to have data specializing institutions to provide support for consulting on data pseudonymization and assessing the appropriateness of pseudonymized data for small- and medium-sized fintech businesses. - Consider ways to develop a data hub network equipped with adequate security functions such as managing data transfer history to help resolve challenges faced by small- and medium-sized fintech businesses and support data transactions and use of pseudonymized data in safe ways. Providing support for data convergence - Review ways to safely allow the use of a certain value of CI (connecting information) as the generative data of combination key to help lower the time and cost of data convergence and improve the quality of converged data. Promoting expanded use of synthetic data - Establish a guideline (for instance, for how to determine the anonymity of data) to ensure that synthetic data can be utilized in safe and effective ways. - Set up a data library for AI in financial sectors which will allow the converged (pseudonymized) data to be reused. The FSC will regularly hold working group meetings to continue to engage with relevant parties and seek areas requiring improvements. Based on these d
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May 18, 2023

FSC Vice Chairman Highlights Mutual Cooperation with Central Asia during Visit to Uzbekistan

FSC Vice Chairman Kim So-young attended the Korea-Uzbekistan fintech associations MOU (memorandum of understanding) signing ceremony as well as a joint seminar hosted by both countries banking associations during his visit to Uzbekistan on May 17. Korea-Uzbekistan fintech association MOU On May 17, Fintech Center Korea and Fintech Association of Uzbekistan signed an MOU to promote mutual cooperation. The fintech scene in Uzbekistan is still at a formative stage and Koreas fintech businesses are expected to help make significant contributions in sharing their business knowhow and experience. The Korean fintech businesses attending the MOU signing ceremony introduced their blockchain-based payment and certification solution technologies to their Uzbek counterparts and had discussions on possibilities of expanding their businesses to Central Asia in the future. Seminar hosted by Korea Federation of Banks and Uzbekistan Banking Association The Korea Federation of Banks and the Association of Banks of Uzbekistan hosted a joint seminar on May 17 to share Koreas digital infrastructure-backed financial and fintech industry experience and relevant policy and regulatory issues. The seminar was attended by Uzbekistans financial regulatory agency and financial companies and it provided an opportunity to broaden communication and exchange between the Korean financial companies doing business in Uzbekistan and the local officials. FSC Vice Chairman Kim So-young delivered a keynote address at the seminar and spoke about ways to promote financial cooperation between Korea and Central Asia. In particular, Vice Chairman Kim spoke about the potential synergy effects of Korean financial companies entering markets in Central Asian countries. Other speakers at the seminar also discussed issues regarding Koreas financial data infrastructure, financial regulatory sandbox program and credit information system. On the second leg of his trip, Vice Chairman Kim will visit Kyrgyzstan to attend
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May 17, 2023

FSC Chairman Speaks about Opportunities and Challenges in Embracing AI in Financial Sector

FSC Chairman Kim Joo-hyun attended a seminar on boosting the competitiveness of artificial intelligence (AI) in financial sectors hosted by Korea Credit Information Services on May 17 and delivered congratulatory remarks. At todays seminar, experts from both public and private sectors shared key trends of AI usage in financial sectors and discussed policy strategies to boost the competitiveness of the financial industry. The following is a summary of FSC Chairman Kims remarks. Summary of FSC Chairmans Remarks The development of hyper-scale, generative AI has recently put a new spotlight on the potential of AI. Investment in AI and its usage have been growing in diverse areas where AI can be put to use to help increase convenience for consumers and make financial companies core functions more efficient. At the same time, it is also crucial to consider ways to effectively respond to situations of AI failures or digital herding. Financial institutions are strongly encouraged to invest in AI and make use of the technology to enhance the global competitiveness of domestic financial businesses. The FSC has been working to embrace the use of AI in financial services and will continue to provide active support in this regard. So far, authorities have introduced a number of guidelines on AI, for example, on using and developing AI in financial sectors, verifying AI-based credit scoring models and ensuring security in AI-based financial services. Going forward, first, the FSC plans to establish a data library for AI in financial sectors and designate more data specializing institutions to facilitate big data analytics. Second, the FSC will work to improve the regulatory environment on financial data to promote an expansion of new AI-based services. Lastly, the FSC will set up a testbed for AI in financial sectors and prepare a guideline on explainable AI (XAI) with a goal to help increase confidence in AI-based financial services. The FSC will work to ensure that the specific
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May 16, 2023

FSC Vice Chairman to Visit Central Asia to Support Overseas Expansion of Domestic Financial Companies

FSC Vice Chairman Kim So-young will visit Uzbekistan and Kyrgyzstan from May 16 to 19 in order to help strengthen cooperation with the Central Asian countries and provide support for domestic financial institutions to expand their businesses overseas. In March this year, the FSC set up a new organization (Financial Industry Globalization Taskforce) charged with providing support for expansion of domestic financial institutions overseas business activities. The taskforce has held a series of seminars and talks with financial sectors to listen to their comments and suggestions. In this regard, Vice Chairman Kims visit to the Central Asian countries is a significant step forward to strengthen support for domestic financial companies overseas business activities. This year marks the 31st anniversary of diplomatic relations between Korea and the Central Asian countries. Last year, the 15th Korea-Central Asia Cooperation Forum was held and close relationship has been maintained between Korea and the region in a variety of areas ranging from health care, digitalization, tourism, environment and economic security. Recently, the trade volume between Korea and the region also grew more than twofold in the past four years. However, the degree of exchange and cooperation in financial sector has remained limited thus far. In this regard, FSC Vice Chairman Kims visit this time will serve as a turning point in boosting exchange and cooperation in financial sector. Central Asia has abundant mineral and energy resources with high potential for growth. As the five Central Asian countries are seeking to advance and digitalize their financial industries, the FSC expects that Korean financial companies will be able to make significant contributions as they are equipped with ample experience in developing digital infrastructures. In this regard, the visit to Central Asia this time will set a stepping stone for expanding opportunities in the future.
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May 11, 2023

Household Loans, April 2023

In April 2023, the outstanding balance of household loansacross all financial sectors increased KRW0.2 trillion, rising for the first time since August 2022. Financial authorities will closely monitor trends in household debt while continuing to check potential risks of high interest rates on the household debt situation. (Overall) Household loans across all financial sectors rose KRW0.2 trillion in April 2023, but the year-on-year growth rate declined (down 1.5 percent) at a slightly faster pace compared to a month ago (down 1.4 percent). (By Type) Mortgage loans grew faster than the previous month while credit loans declined at a slower pace. - (Mortgage Loans) Mortgage loans rose KRW1.9 trillion with a drop of KRW1.0 trillion in the nonbanking sector and a rise of KRW2.8 trillion in the banking sector. - (Other Types of Loans) Other types of loans fell KRW1.7 trillion with a decline from both banks (down KRW0.5 trillion) and nonbanks (down KRW1.2 trillion). (By Sector) Household loans rose in the banking sector but fell in the nonbanking sector. -(Banking Sector) Household loans in the banking sector increased KRW2.4 trillion in April. Mortgage loans from banks grew KRW2.8 trillion, despite drops in jeonse loans (down KRW1.7 trillion) and group lending for new apartment subscription (down KRW0.4 trillion), as the volume of general individual mortgage loans (up KRW0.3 trillion) and policy mortgage loans (up KRW4.7 trillion) increased. Other types of loans in the banking sector declined (down KRW0.5 trillion) at a slower pace compared to a month ago (down KRW3.0 trillion) as credit loans fell more slowly (down KRW2.3 trillion down KRW0.6 trillion). -(Nonbanking Sector) Nonbanks saw a drop of KRW2.2 trillion in household loans with slight increases in the insurance (up KRW0.1 trillion), specialized credit finance (up KRW0.3 trillion) and savings banks (up KRW0.02 trillion) sectors but a decline in the mutual finance sector (down KRW2.6 trillion). Financial authoriti
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May 08, 2023

FSC Introduces Measures to Facilitate Corporate Merger and Acquisition Activities

The FSC announced a set of measures aimed at facilitating corporate merger and acquisition activities on May 8. In the second half of this year, the FSC also plans to announce additional policy agenda items for facilitating corporate MA activities through coordination with the Ministry of Justice. Corporate MAs are an important mechanism to boost management efficiency and reorganize the structure of an enterprise. They also help to increase the overall productivity of an economy as well as its recovery from a downturn. However, the corporate MA market saw a significant decline recently due mainly to the worsening of macroeconomic conditions. Against this backdrop, the FSC prepared plans to (a) seek regulatory improvements on corporate MAs, (b) strengthen support for corporate restructuring through MAs, (c) support strategic MA activities in line with industrial restructuring demand, and (d) make domestic rules on corporate MAs more congruent with global standards. Key Details Seek regulatory improvements on corporate MAs to propel growth momentum Authorities plan to make improvements to some of the regulations that have been identified as unreasonable including those on public tender offer, corporate mergers and credit offering by investment banks. First, when making a public takeover bid, the burden of securing funds beforehand will be eased. A loan commitment from a trustworthy acquiring financial institution or an investment agreement from a limited partner will be recognized as an admissible document showing financial capability of a tender offeror. Second, in a spin-off or a post-spin-off merger, the process of converting CBs (convertible bonds) and BWs (bonds with warrants) will be streamlined as the electronic securities depository (Korea Securities Depository) will be allowed to get investor information directly from securities firms and process conversion of CBs and BWs electronically. Third, investment banks will be able to more actively offer credit to bu
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Apr 26, 2023

Revised Rule to Require IPO Bookrunners to Check Payment Capability of Institutional Investors

The FSC approved a revision bill of the regulation on financial investment businesses at its 8th regular meeting held on April 26. This revision bill is a follow-up to the measures to improve the soundness of the initial public offering (IPO) market announced in December last year and contains a measure to facilitate carbon emissions trading by securities companies along with other regulatory overhaul items. Requirement for IPO bookrunners First, when managing IPOs, the IPO bookrunner will be responsible for verifying institutional investors ability to pay for stocks before the allotment of shares takes place. In an IPO, the bookrunner performs a book building to check demands from institutional investors in order to determine an appropriate IPO price. The public offering price decided is then used to get subscription from retail investors. However, for certain high-demand items, the issue of fictitious subscription by institutional investors in excess of their payment capabilities and that of over-competition have been problematic. It has been pointed out that this practice of fictitious subscription has been hindering the price discovery function of the book building process, causing distortions in the IPO market. Thus, this revision is aimed at preventing the practice of fictitious subscription and strengthening the responsibility of IPO bookrunners throughout the book building process by introducing sanctions such as imposition of an administrative fine for unfair transaction activity when bookrunners fail to check institutional investors stock payment capabilities prior to allotting shares. This requirement will take effect from the securities registration reports for IPOs filed after July, after relevant rules change is completed by the industry association. With this revision bill, apart from the measures for allowing bookrunners to preliminarily review institutional investors demands and introducing the cornerstone investing system, all other follow-up items
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Apr 24, 2023

Threshold on Large Unlisted Companies to be Made More Reasonable in Accounting Rules

The FSC announced on April 24 that a partial revision bill of the Enforcement Decree of the Act on External Audit of Stock Companies has been approved at a cabinet meeting held earlier today and will take effect from May 2. This revision bill is a follow-up to the measures to overhaul accounting regulations to lower burden on SMEs announced in October last year, and it aims to encourage individuals to report on accounting frauds. Key details of the revision are stated below. First, the threshold for determining large unlisted companies that fall under the similar level of accounting regulations applied on listed companies will be increased from the current level of KRW100 billion or more in assets to KRW500 billion or more. However, the current threshold of KRW100 billion in assets will remain for companies with many stakeholders such as investors that are bound to file business reports and those belonging to conglomerates bound by disclosure duties. The requirement for establishing and operating an internal accounting control system and for periodically appointing external auditors will also be adjusted according to this change in asset threshold for determining a large unlisted company. Second, there will be an incentive given to company management to strengthen their responsibility over accounting management and encourage internal control on a voluntary basis. For companies that voluntarily disclose weaknesses in their internal accounting control system or have taken steps to improve them, there will be an incentive to be removed from a supervisory action. In addition, the role of establishing and managing standards for assessing and reporting internal accounting control system will be performed by the Financial Supervisory Service (FSS) from now on to help induce more compliance from companies. Third, there will be an enhanced level of monetary rewards and protection for individuals reporting on accounting fraud activities. To help encourage individuals to repor
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Apr 24, 2023

FSC and KAI Participate in First Meeting of Sustainability Standards Advisory Forum

The FSC and the Korea Accounting Institute (KAI) participated in the first meeting of the Sustainability Standards Advisory Forum (SSAF), an official advisory body of the International Sustainability Standards Board (ISSB), on April 17 in Frankfurt, Germany. At the first meeting, members discussed the progress in the development of the IFRS S1 (general sustainability-related disclosure requirements) and S2 (climate-related disclosure requirements), future standards setting priorities and the connectivity and compatibility between the ISSBs sustainability disclosure standards and the International Accounting Standards Board (IASB)s accounting standards. In March last year, the ISSB published its draft IFRS S1 and S2 and collected feedback from around the world. For crucial issues raised in the comment process, the ISSB will go through a re-deliberation before announcing financial standards at the end of June this year. The International Organization of Securities Commission (IOSCO) is also expected to decide whether to endorse them when the final standards are made public. The SSAFs first meeting also dealt with the areas of future standard setting priorities. The ISSB has already identified four potential projectsbiodiversity, ecosystems and ecosystem services; human capital; human rights; and integration in reportingas future standard setting priorities. In May this year, the ISSB plans to announce its agenda priorities for the next two years and seek feedback. The SSAF meeting provides an important venue for Korea to directly engage with the ISSB and other countries and strengthen international cooperation on sustainability disclosure standards. The SSAF meeting is held four times annually and the next meeting is expected to be held in July. The FSC and the KAI plan to continue to actively participate in global discussions on sustainability disclosure standards. In the meantime, authorities will also work on developing ESG disclosure standards in Korea as the ESG
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Apr 20, 2023

FSC Chairman Speaks about Measures to Boost Support for Startups and Venture Businesses

The FSC and the Ministry of SMEs and Startups held a press briefing on their joint effort to boost support for startups and venture businesses on April 20. The following is a summary of FSC Chairman Kim Joo-hyuns opening remarks. FSC Chairmans Remarks The measures to support startups and venture businesses being announced today are focused on helping the industry escape the problem of death valley in terms of their financing needs, and the measures take into account opinions of key industry participants such as venture investors and startups. According to venture investors, the industry currently faces difficulties in attracting new investment due to liquidity shortage amid interest rate hikes and anxieties in financial markets. Also, the slowdown in IPO market activities has made it difficult for investors to collect their investments, which restricts opportunities for new investment. Against this backdrop, while reflecting the opinions and needs of the industry, the government has drawn up support measures that will help strengthen the role of policy financial institutions while having the private sector play the key role in this private-public joint effort. Support for venture investors First, to support venture capital to liquidate funds at maturity according to schedule to allow opportunities for new investment, authorities will set up a secondary fund worth KRW1 trillion through policy financial institutions this year. Second, to facilitate banks to provide more venture capital, the banks investment cap on venture funds will be raised from the current level of 0.5 percent of equity capital to 1% of equity capital. Third, additional funds will be injected to the KONEX scale-up fund to promote innovative startups to be listed on KONEX and enable them to make collection on investment. Support for startups First, to help ensure a continuous growth of early-stage startups that are not making any profits and deep tech startups for which it may take a long time befor
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Apr 17, 2023

FSC Introduces Verification System for AI-driven Credit Scoring Model and AI Security Guideline

The FSC introduced a verification system for artificial intelligence (AI)-driven credit scoring model and a security guideline for the use of AI in the financial sector on April 17 with an aim to create a more credible environment for AI usage. These are follow-up measures for the plans to promote AI usage and ensure credibility in the financial sector announced in August 2022. Key Details I. Verification System for AI-driven Credit Scoring Model The verification system will examine whether credit bureaus (CBs) are properly managing credit data in line with peculiar characteristics of AI, whether these companies have made a reasonable selection for algorithms and variables used in their credit scoring models and whether the credit scoring models developed by these companies are statistically significant. The verification system will also look into whether CBs can adequately explain to financial consumers about their credit scoring models and credit assessment results. The verification committee on personal credit scoring system will make use of this verification system to examine CBs (offering credit scoring service to sole proprietors) that are using an AI-based credit scoring model within this year. Examination of the AI-based credit scoring models used by CBs offering personal credit scoring service to individuals will also take place in the future. II. Security Guideline for Use of AI in Financial Sector The security guideline for AI usage in the financial sector offers stage-by-stage security issues that need to be considered when developing an AI-based model while providing a security checklist for AI chatbots. First, the state-by-stage security issues that need to be considered are organized in the order of (a) collecting data for machine learning, (b) preprocessing of data, (c) designing and learning AI models and (d) verifying and assessing AI models. The security guideline provides suggestions on the data management and processing method, model designing t
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Apr 13, 2023

FSC Introduces Measures to Improve the Process of Bank Branch Closure

The FSC introduced a set of measures aimed at improving the process of banks branch closures at the 5th working group meeting of the taskforce on improving the management and operating practices of banks held on April 12. The key measures include strengthening the preliminary impact assessment process and expanding the scope of information provided to consumers. From now on, before a branch closure, banks should collect opinions from the branch customers and make decision prudently. When a branch closure is unavoidable, banks should arrange to have an alternative service provision channel beforehand through a joint office, small-scale office, makeshift office or teller partnership to make sure that the same level of service is provided to consumers as before. Key Details I. Strengthen the Preliminary Impact Assessment Process Under the common procedures established for banks branch closures, banks need to conduct a preliminary impact assessment prior to closing down a branch and establish an alternative service provision channel when a branch closure has been decided. However, with the number of bank branch closures going up steadily, there have been calls to strengthen the effectiveness of these common procedures. Therefore, taking examples from overseas cases,from now on, it will be necessary for banks to establish relevant procedures to collect opinions from the consumers using their branch and take consumer opinions into account to make an adjustment to their alternative service provision plan, perform an impact assessment again or reconsider the decision to close down the branch. When a considerable impact on consumers is expected, banks should continue to maintain their branch office in principle. However, if it is unavoidable to close down the branch, banks should ensure that consumers can continue to access financial services without much inconvenience after its closure by establishing an alternative service provision channel through a small-scale office, jo
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Apr 10, 2023

Household Loans, March 2023

In March 2023, the outstanding balance of household loansacross all financial sectors declined KRW5.0 trillion, showing a continuing trend of decline. Financial authorities will work to ensure a stable management of household debt and keep close tabs on potential risks that may be caused by high interest rates. (Overall) Household loans across all financial sectors fell KRW5.0 trillion in March 2023. The year-on-year change rate (down 1.4 percent) accelerated somewhat compared to a month ago (down 1.3 percent), showing a continuing trend of decline since the second half of last year. (By Type) Mortgage loans edged up from a decline in the previous month and other types of loans fell at a faster pace. - (Mortgage Loans) Mortgage loans rose KRW1.0 trillion with a grow in the banking sector (up KRW2.3 trillion) and a decline in the nonbanking sector (down KRW1.3 trillion). - (Other Types of Loans) Other types of loans fell KRW6.0 trillion, declining at a faster pace compared to the previous month (down KRW4.7 trillion), led by credit loans (down KRW3.2 trillion). (By Sector) Household loans edged down in both the banking and nonbanking sectors. -(Banking Sector) Household loans in the banking sector fell KRW0.7 trillion in March, declining at a slower pace compared to a month ago (down KRW2.7 trillion). Mortgage loans from banks grew KRW2.3 trillion as the volume of policy mortgage loans increased (up KRW7.4 trillion), but jeonse loans (down KRW2.3 trillion), group lending for new apartment subscription (down KRW0.9 trillion) and general individual mortgage loans (down KRW1.9 trillion) all declined. Other types of loans in the banking sector fell KRW2.9 trillion as credit loans went down KRW2.3 trillion. -(Nonbanking Sector) Nonbanks saw a drop of KRW4.4 trillion in household loans with a slight increase in insurance companies (up KRW0.4 trillion) and declines in mutual finance companies (down KRW4.0 trillion), specialized credit finance companies (down KRW0.4 trillion
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Apr 10, 2023

FSC Proposes Rules Change in the Enforcement Decree of the Banking Act

The FSC gave advance notice on April 10 regarding rules change in the Enforcement Decree of the Banking Act, which will be put up for public comment until May 22. The revision bill establishes a specific standard for when a bank should get authorization from the FSC if it closes down or transfers or acquires a major part of its business operation. It also contains a regulatory modification in agreement with upstream legislation and a penalty clause for a specific type of violation. When Citibank Korea decided to draw back its retail banking operation in 2021, the FSC was not able to proceed with an authorization process since the Banking Act stipulates a banks closure of the entire part of its business as an area where the FSC could deliver authorization. For the closure of a part of the banks business operation, the FSC then saw it unlikely that it could give authorization under the purview of the Banking Act. Nonetheless, given the necessity to protect the rights and interests of consumers, the FSC then gave the order to Citibank Korea to draw up a detailed plan to minimize inconvenience to consumers, protect consumer rights and maintain sound market order and implement its plan faithfully as it was authorized to take such action as prescribed by the Financial Consumer Protection Act. In March 2023, the Banking Act was amended, however, to subject banks to get authorization from the FSC when they close down not only the entire part of their business but a major part of their business operation as well. The amended Banking Act then delegates the authority of determining what constitutes a major part to its Enforcement Decree. Thus, this partial revision proposal for the Enforcement Decree of the Banking Act specifies the major part of the banks business operation to be closed down as a part of business constituting 10/100 or more of the banks assets and total profits. Also, considering that the transfer of a part of a business is in essence same as the closure of a
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Apr 06, 2023

Online Insurance Policy Comparison and Recommendation Service to be Piloted

The FSC introduced measures to allow platform service providers to test operate insurance policy comparison and recommendation service to help enhance consumer benefits and promote competition in the insurance sector. From as early as the end of this year, consumers will be able to compare various insurance policies offered by different insurance companies and receive recommendation on suitable products before signing up at an insurance companys online website of their choosing. Using the insurance policy comparison and recommendation platform service, consumers will be able to sign up for the types of insurance that are most widely used and closely linked to their everyday lives such as indemnity health insurance and auto insurance plans at a more affordable cost. A platform service provider refers to a non-financial company such as a MyData service provider or electronic financial business operator. Currently, the Insurance Business Act only permits employees of insurance companies, insurance agents and insurance planners to engage in solicitation activities. For a platform business to offer insurance policy comparison and recommendation service, it needs to be selected as an innovative financial service provider under the financial regulatory sandbox program. As the entry of platform businesses can have an enormous impact on the operation of insurance companies and insurance agents, with complex interest relationships among them, authorities set up a taskforce consisting of all relevant stakeholders and held meetings throughout between September 2022 and March 2023. Despite early-stage differences in opinions on the issue of whether to permit the availability of auto insurance and about the maximum level of commission, the taskforce participants reached a common ground on the ways to test operate platform services while minimizing the impact on traditional solicitation channels and concerns about anti-competition with consumer benefits placed at the top of priori
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Apr 03, 2023

Call Option and Refixing Rules to be Applied on Convertible Preference Shares

The FSC announced that the same call option and refixing rules currently applied on convertible bonds (CBs) will begin to apply on (redeemable) convertible preference shares issued by listed companies from May 1. As a follow-up to the previously introduced plan to improve the rules on the convertible bond market announced in September last year, the FSC completed revising the regulation on securities issuance and disclosures on March 29. The revised regulation deals with the rules regarding call option and refixing. First, it places a limit on exercising call options by largest shareholders within the level of their initial shareholding proportion at the time of the issuance of (redeemable) convertible preference shares. Also, when a call option is exercised by a third party, the issuing company will be required to disclose that information. Second, the revised regulation contains refixing rules for (redeemable) convertible preference shares issued through private offering by listed companies. This makes it mandatory to set an upward adjustment of convertible price if share prices rise after a downward adjustment of convertible price following a drop in share prices. Along with the previously introduced (Dec. 2021) regulatory improvements on CBs, this regulatory change on (redeemable) convertible preference shares is expected to help prevent cases where these bonds and stocks are utilized as an expedient way for largest shareholders to expand their shareholding status. This regulatory change will take effect from May 1, applicable for (redeemable) convertible preference shares decided to be issued by company boards from then on. The FSC and the FSS will continue to closely examine market situations and seek additional measures to improve the rules on the convertible bond and (redeemable) convertible preference share market. * Please refer to the attached PDF for details.
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Apr 03, 2023

English Disclosures to be Provided by Large Listed Companies from 2024

From 2024, large listed companies will be required to submit English disclosures on material information within three days from filing their regulatory disclosures in Korean at the Korea Exchange (KRX). The FSC and the KRX announced that relevant regulatory revision process has been completed to implement the English disclosure requirement from 2024, as part of the previously announced plan to expand English disclosures in phases which aims to ultimately boost foreign investors accessibility to Korean capital markets. According to this plan, English disclosures on material information will become mandatory for KOSPI-listed companies in two phases (2024-2025 and from 2026) starting with large listed firms. A variety of support programs to promote an expansion of English disclosures will also be made available. The KRXs revised disclosure rules deal with provisions needed to implement the first stage mandatory English disclosures as follows. From 2024, KOSPI-listed firms with assets worth KRW10 trillion or more will be required to submit English disclosures on (a) matters related to closing financial statement, (b) matters concerning important decision-making and (c) matters pertaining to suspension of trading within three days from filing their regulatory disclosures in Korean. Although foreign shareholders make up a large part of Korean capital markets,inadequate provision of information in English has been identified as a problem. Through this plan, authorities expect that English disclosures will be expanded which will help to improve information accessibility for foreign investors and strengthen global competitiveness of Korean capital markets. To facilitate an expansion of English disclosures, the KRX will provide diverse support programs such as offering incentives to businesses that submit outstanding disclosures in English, increasing the availability of translation service provided by professional translation firms and introducing guidelines on English discl
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Mar 29, 2023

Authorities Discuss Measures to Strengthen Loss Absorbing Capacity of Mutual Finance Businesses

The FSC and the FSS held the first mutual finance policy council meeting of this year with relevant government authoritiesand mutual finance business representativeson March 29. At the meeting, authorities analyzed the mutual finance businesses level of exposure to the real estate sector and discussed ways to strengthen their loss absorbing capacity. Key Discussion Details With the recent increase in the volume of real estate-related loans issued in the mutual finance sector and the rise in debt overdue ratio, authorities discussed current situations and ways to bolster prudential management of mutual finance businesses. In this regard, authorities proposed raising the loan loss reserve requirement on mutual finance businesses from the current level of 100 percent to 130 percent for loans extended to real estate and construction sectors in order to improve their loss absorbing capacity. To increase the level of effectiveness in the governments policy measures regarding real estate project finance (PF), authorities plan to seek submission of monthly reports on all mutual finance businesses real estate PF sites to ensure prompt sharing of information in the event of a default risk. Moreover, authorities had discussions on unifying current disparities existing between the external audit requirements of different mutual finance sectors by making them all subject to external audit on an annual basis. The mutual finance policy council also discussed ways to strengthen internal control standards of mutual finance businesses. Further Plan Authorities will gather comments on specific improvement measures from relevant ministries and mutual financial businesses until April and seek revision of related laws thereafter. * Please refer to the attached PDF for details.
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