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Feb 26, 2020
- Government Supports Smooth Operation of Corporate AGMs amid COVID-19 Spread
- The government announced supportive measures on February 26, 2020 to ensure the safe and smooth operation of companies’ annual general meetings (AGMs) as the spread of COVID-19 may delay the submission of financial statements, audit and annual reports by some companies operating subsidiaries in China.Under the Financial Investment Services and Capital Markets Act and the External Audit Act, listed companies are required to submit (i) a financial statement to auditors no later than six weeks before the AGM; (ii) an audit report a week before the AGM; and (iii) an annual report within 90 days after the end of each fiscal year. If companies miss such deadlines, they may face administrative sanctions or penalties.Given that the outbreak of COVID-19 is an unexpected and unavoidable event for both companies and auditors, the Securities and Futures Commission (SFC) will grant an exemption from administrative sanctions for companies and auditors who satisfy the following conditions: (i) A company’s fiscal year ending on December 31, 2019; (ii) A company or an auditor must satisfy one of the followings:- COMPANY whose main operations (including subsidiaries) are based or conducted in China or domestic locations designated as “COVID-19 affected areas;” and whose financial statements or external audits were delayed by the outbreak of COVID-19 or disinfection measures- AUDITOR cannot complete an external audit for the fiscal year of 2019 due to the outbreak of COVID-19 or disinfection measures, such as closure of auditor’s office, etc. (iii) A company or an auditor is under ineluctable circumstances equivalent to (i), (ii). Companies or auditors should submit applications to the Financial Supervisory Service (FSS) or the Korean Institute of Certified Public Accountants (KICPA) from February 28 to March 18 to qualify for an exemption from administrative sanctions.The FSS and the KICPA will submit their reviews of application to the SFC, scheduled to be held at the end
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Feb 26, 2020
- Fintech and Digital Finance Policy for 2020
- The Financial Services Commission announced on February 25, 2020 its key policy plans for fintech and digital finance, which include advancing digital finance, promoting data economy, cultivating new fintech industry and services, working on regulatory reform in fintech and digital sectors, and strengthening the foundation for innovation.KEY POLICYI. ADVANCING DIGITAL FINANCEIn order to ensure long-lasting innovation and stability in the financial sectors, the government will work to promote innovation in digital finance and establish a digital risk management system.A) Improve digital finance’s infrastructure, industry and market► Open banking: a) expand functions and scale by allowing participation by mutual finance and financial investment businesses, and work on measures to enhance security and safety of financial consumers; b) push for the enactment of a legislative provision (Electronic Financial Transactions Act) that requires banks to provide their money transfer function through open API► Electronic financial businesses: introduce MyPayment and integrated payment businesses to promote the development of financial platforms offering a variety of services, while promoting innovation in personal authentication services, such as biometric authentication► Consumer protection: bring up the level of safeguards and protections for digital finance users on a par with advanced economiesB) Maintain appropriate balance between innovation and stability by strengthening the management and supervision of digital risks► Financial data security: establish principles to properly respond to new types of digital security risks by requiring internal risk control mechanisms in financial companies, operating a public-private joint risk management framework and bolstering response mechanisms for the incident response team► Risk management for third party: strengthen security management for IT outsourcing and set up a risk monitoring system using regtech for possible ri
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Feb 24, 2020
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Feb 21, 2020
- Government to Closely Monitor Business Needs amid COVID-19 Outbreak
- FSC Vice Chairman Sohn Byungdoo convened a meeting on February 21, 2020 to assess the implementation of the financing support intended to help SMEs and small merchants amid the COVID-19 outbreak.PROGRESSBetween February 7 and 18, a total of KRW322.8 billion (5,683 individual cases) in loans and guarantees as well as loan and guarantee extensions were provided to the SMEs, small merchants and self-employed business owners whose businesses have been hit by the spread of COVID-19.► SME financing by policy banks: KRW16.2 billion in new loans, KRW31.96 billion in loan extensions, KRW25.48 billion in new guarantees and KRW62.1 billion in guarantee extensions► Small merchant financing by policy banks: KRW1.34 billion in new loans, KRW1.53 billion in new guarantees and KRW91.6 in guarantee extensions► Local banks provided KRW86.45 billion (179 cases) in total: KRW17.14 billion in new loans and KRW42.88 billion in maturity extensions and deferred payments► For small businesses, credit card companies also provided about KRW4.47 billion in discounted interest rates and late fees, and about KRW380 million in deferred payment plans.FURTHER PLANSThe government will continue to review how the COVID-19 financing support measures are being provided to the businesses in need and ensure a prompt delivery to the affected companies.While closely monitoring the business needs, the government will draw up additional measures when necessary.* Please refer to the attached PDF for details.
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Feb 20, 2020
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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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Feb 14, 2020
- Measures to Improve Regulatory Framework on Hedge Funds
- The Financial Services Commission and the Financial Supervisory Service unveiled on February 14, 2020 an evaluation of hedge fund market and the measures to improve its regulatory framework. The measures are intended to ensure the autonomy of private fund management while addressing regulatory inadequacy and vulnerabilities found in the assessment by introducing a minimum necessary level of regulations.BACKGROUNDHedge funds play an important role in providing venture capital in startup investment ecosystem from business setup to scale-up to exit. However, the recent misselling, inadequate liquidity management and unlawful and/or unfair activities in the market have shown the necessity to improve the regulatory framework.Against this backdrop, the government unveiled on November 14 last year the Measures to Strengthen Investor Protection with High-risk Investment Products, which a) prevented sales of public offering funds in the form of private funds, b) placed stronger investor protection for ‘highly complex investment products,’ c) raised entry requirements for retail investors from KRW100 million to KRW300 million, and d) tightened regulation standards for financial companies selling OEM funds.From November 2019 to January 2020, the government conducted a review on the hedge fund market to assess potential risks and vulnerabilities. The assessment was made on 52 asset management companies and 1,786 private funds worth KRW 22.7 trillion. Most hedge funds did not show risky operation methods or investment structures unlike the large scale suspension of redemption cases surfaced recently.Based on this market review, the government has prepared the following measures in order to strengthen investor protection and ensure credibility in the market.KEY MEASURESI. ENHANCE RISK MANAGEMENT BASED ON MARKET DISCIPLINESThe government will work to establish a foundation in which different market participants and players can provide a supervisory role and “checks and balan
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Feb 13, 2020
- FSC to Hold Information Session on Revised Credit Information Act
- The Financial Services Commission will hold an information session on February 20, 2020 on the amendment of the Credit Information Use and Protection Act, which is scheduled to take effect starting August 5, 2020. The information session will provide useful information about the revised law, while offering the government a chance to listen to and gather opinions from diverse stakeholders. The FSC will revise relevant rules and regulations prior to the effective date while working to reflect public opinions.KEY FEATURES OF THE AMENDMENT► ESTABLISHING NEW LEGAL BASIS FOR USING AND ANALYZING BIG DATA- Pseudonymised personal information may be used without consent for statistical, industry research and public documentation purposes.- Converging data is permitted only by the institutions designated by the government.- Safety measures are established for the use and convergence of pseudonymised data, including a prohibition on re-identification of pseudonymised data and a requirement for separate management of additional information. ► STRENGTHENING THE ROLE OF PERSONAL INFORMATION PROTECTION COMMISSION- The revision bill on the Personal Information Protection Act upgrades the status of the Personal Information Protection Commission (PIPC) from an administrative commission to that of a central administrative agency with authority to conduct investigations, regulate commercial enterprises and implement relevant laws.► IMPROVING REGULATORY FRAMEWORK ON CREDIT BUREAU INDUSTRY- The credit bureau industry will be categorized into a) personal CB, b) individual business CB and c) corporate CB, while the entry barrier for credit bureau businesses will be lowered.- The current regulation which restricts credit bureau businesses from performing for-profit operations will be lifted, and credit bureau businesses will be allowed to conduct data analysis and processing as well as consulting.- Conduct regulations will be established to improve the soundness of the credit bureau in
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Feb 13, 2020
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Feb 12, 2020
- Government to Support Educational Programs to Cultivate Digital Finance Specialists
- The Financial Services Commission and the Seoul Metropolitan Government will provide KRW19 billion over a 4-year period (2020-2023) to launch educational programs aimed at cultivating more specialists in digital finance.Digital finance provides financial services using key innovations in information technology, such as big data and artificial intelligence. It has created new jobs and brought significant changes to how financial services are delivered.Due to rapidly accelerating digital transformation in the financial sector, the demand for more professionals working in digital finance has been rising.The degree and non-degree programs will offer advanced theory and practice courses on diverse areas, such as ‘IT deep learning,’ ‘big data crawling and text analysis,’ ‘cloud computing,’ ‘blockchain in finance,’ etc.The programs are targeted at the current financial industry workers, prospective fintech entrepreneurs, fintech professionals, and those who are preparing for financial sector jobs.The government will select an educational institution or a consortium in March to be designated as the digital finance education provider. Universities, research and/or other finance-related institutions are eligible to apply.* Please refer to the attached PDF for details.
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Feb 07, 2020
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Feb 05, 2020
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Feb 03, 2020
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Jan 30, 2020
- FSC to Introduce Coinsurance for Primary Insurers
- FSC Vice Chairman Sohn Byungdoo presided over a meeting on improving the soundness of assets held by primary insurance companies on January 30, 2020.The measures to introduce coinsurance was discussed at the meeting to help insurance companies adjust or reduce debts in preparation for the implementation of the new accounting and solvency rules, the International Financial Reporting Standards (IFRS) 17 and K-Insurance Capital Standard (K-ICS).The introduction of coinsurance is expected to help improve financial soundness of primary insurers as they are able to cede risks associated with insurance products to reinsurance companies.COINSURANCECoinsurance is a type of full-risk reinsurance through which primary insurers can transfer risks to reinsurers at premiums. Coinsurance is different from traditional reinsurance because it allows primary insurers to cede an entire block of risks including the investment portion and expense loading of the premium, instead of only the risk portion of the premium. Traditional reinsurance normally has a yearly renewable term whereas coinsurance offers longer term deals.EXPECTATIONI. Primary insurers with high interest rate products can cede risks associated with interest rate volatility or cancellation to reinsurers, thereby boosting their financial soundness.II. Issuing new capital stocks or subordinated debentures is an expansion of the available capital, whereas coinsurance is downsizing the required capital, which will offer a new solution for managing risk exposures for insurance companies.III. Coinsurance has been widely used in the European and the US insurance markets. The know-hows and asset management experiences of the overseas reinsurers will be useful.SPECIFIC PLANSTo introduce coinsurance, the government will make the following changes to the current regulations and rules on the supervision of insurance businesses – a) permit coinsurance, b) make accounting methods clearer, c) improve the risk-based capital ratio, and
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Jan 28, 2020
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Jan 28, 2020
- Government Bolsters Market Monitoring amid Coronavirus Outbreak
- FSC Vice Chairman Sohn Byungdoo convened a meeting on January 28, 2020 to assess the impact of the spread of coronavirus on the domestic and global financial markets. Amid rising concerns over economic and financial markets at home and abroad, the Korean government has put in place a response system, working on preventive measures and monitoring its impact on our economy.The following is a summary of Vice Chairman Sohn’s remarks:The financial markets in Korea remained stable until mid-January following the conclusion of the first phase deal between the US and China over their trade conflicts and due to eased tension in the Middle East. However, with the spread of the new coronavirus, volatility increased last week.Today, KOSPI fell 3.1 percent while the won-dollar exchange rate rose 0.7 percent (up 8.0 won).Based on our past experiences with the SARS (severe acute respiratory syndrome) outbreak in 2003, the avian influenza in 2009, and the Middle East respiratory syndrome (MERS) in 2015, the impact of the new coronavirus outbreak on domestic financial markets will depend on how extensive it spreads in Korea.The Korean financial markets may experience rising volatilities for a while due to increased appetite for risk-free assets.However, Korea’s external soundness remains solid as its foreign exchange reserves (USD408.8 billion by the end of 2019) and net foreign assets in debt instruments (USD479.8 billion by end of Q3 2019) increased to record high levels.In order to stabilize financial markets, the government should bolster the 24-hour market monitoring system and be prepared for any volatility. The government should also work to provide financial assistance to the industries that may be heavily affected by the epidemic, such as the tourism industry.* Please refer to the attached PDF for details.
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Jan 21, 2020
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Jan 21, 2020
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Jan 20, 2020
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Jan 20, 2020
- Government Prepares to Launch Asia Region Funds Passport in May
- The government has revised the enforcement decree of the Financial Investment Services and Capital Markets Act and other relevant rules for the implementation of the Asia Region Funds Passport. The ARFP will be launched on May 27, 2020 after a 40-day of promulgation and screening of regulations.BACKGROUNDThe ARFP is a multilateral investment promotion initiative between the five member economies1 aimed at promoting cross-selling of publicly offered local funds in each other’s economies through standardized and streamlined registration process.The five member economies agreed to launch the ARFP at the APEC finance ministers’ meeting in September 2013. The members signed a memorandum of cooperation (MOC) in April 2016, and have worked on domestic legislative changes for the implementation.In November 2019, the Korean government completed the revision of the Financial Investment Services and Capital Markets Act, and has since worked on revising the relevant rules and regulations to reflect the details of the MOC.KEY PROVISIONS► REGISTRATION FOR LOCAL FUNDSPublicly offered local funds in Korea that meet the following requirements can apply to be registered as passport funds to be offered in overseas markets.► REGISTRATION FOR FOREIGN PASSPORT FUNDSForeign passport funds, by submitting registration statement, will be available for sale in Korea through a streamlined process.If an infringement of the MOC is found to have occurred by another member country, or the Korean funds face unfair sales restrictions overseas, the government may withdraw the privilege.Foreign passport funds sold in Korea will be subject to the same rules, regulations and investor protection measures as the local publicly offered funds.► REGULATION FOR INVESTOR PROTECTIONAll passport funds are subject to compliance audit regardless of the size of the fund. The fund managers are also required to report to both the home and the host countries about of the relevant information regarding funds,
