Press Releases - Financial Services Commission

Press Releases

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Mar 18, 2020

FSC Grants Viva Republica Preliminary License to Launch Brokerage Business

The FSC decided to grant Viva Republica (Toss) a preliminary license to operate investment brokerage business on March 18, 2020, as it has met the requirements of capital adequacy, appropriateness of business plan and soundness of management specified by the Financial Investment Services and Capital Markets Act.In six months, Viva Republica will be required to submit application for a final approval after getting its human resources and physical infrastructure ready. Viva Republica may begin its securities brokerage business within six months of getting the final approval from the FSC.* Please refer to the attached PDF for details.
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Mar 17, 2020

Revision Act on Crypto Assets Passes at Cabinet Meeting

The revision to the Act on Reporting and Using Specified Financial Transaction Information was approved at a cabinet meeting on March 17, 2020. This revision act will place Korea’s legal framework on crypto assets more in line with international standards set forth by the Financial Action Task Force (FATF) and strengthen its AML/CFT regime.BACKGROUNDAmid growing concerns about the use of crypto assets in money laundering and other illegal activities, the FATF and the G20 worked on a revision to the international standards and urged each country to adopt the revision. The Korean government introduced a revision bill in November last year to reflect this change, and following the passage of the revision act by the National Assembly on March 5 this year, the government approved the revision act at a cabinet meeting today.KEY FEATURESI. REQUIREMENTS FOR CRYPTO ASSET BUSINESS OPERATORSCrypto-asset business operators will be a) required to report their transactions to the Korea Financial Intelligence Unit (KoFIU), b) subject to basic AML requirements (e.g. customer due diligence, suspicious transaction reporting, etc.), and c) bound to follow additional obligations such as keeping separate transaction details for users.II. REQUIREMENTS FOR FINANCIAL INSTITUTIONSFinancial institutions dealing with crypto-asset business operators will be required to conduct customer due diligence on crypto-asset business operators and check whether they report their business tow KoFIU and maintain customer deposits in a separate account.If crypto-asset business operators fail to report to the KoFIU or are deemed as high-risk for money laundering, financial institutions are obliged to refuse (or terminate) such transactions. III. SUPERVISION INSPECTIONThe KoFIU will oversee the supervision and may delegate the authority of inspection to the Financial Supervisory Service.The revision bill will take effect one year after promulgation, and the current crypto-asset business operators will be g
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Mar 17, 2020

New Legislation on Financial Consumer Protection Approved at Cabinet Meeting

The new legislation on financial consumer protection was approved at a cabinet meeting on March 17, 2020. It will be promulgated in March and will become effective one year after in March 2021.1 The new legislation is a part of the government’s policy initiatives to improve the fairness in the economy.EXPECTATIONThe new legislation on financial consumer protection attempts to level the playing field between consumers and financial institutions. It represents a significant turning point as it will help enhance consumer rights and improve public confidence in financial institutions.I. CLOSING REGULATORY LOOPHOLES AND STRENGTHENING ADMINISTRATIVE MEASURES► The six major sales regulations2 currently applied to selected financial products will be applied to all financial products.► Strict punishment such as punitive fines3 will be imposed on violations of the sales regulations, and the government may issue a sales ban to prevent massive consumer damage.II. BOOSTING EFFECTIVENESS OF CONSUMER REMEDIES IN CONFLICT RESOLUTION AND LITIGATION► Financial firms will not be allowed to file a lawsuit for the purpose of leaving the conflict resolution process and avoiding mediation, and courts may decide to halt further legal process through a stay of proceedings if the lawsuit brought to them are unresolved conflict resolution cases.► The burden of proof in liability for damage cases will be transferred to the seller, and consumers will be entitled to the right to request information to be used in conflict resolution cases or lawsuits.III. EXPANDING CONSUMER CHOICES AND IMPROVING TRANSPARENCY► Consumers are entitled to the right to withdraw subscription within a certain period of time, and may resort to unilateral termination of contracts when violation of sales regulations is found.► Financial firms will be required to explain important information such as the risk levels of investment products, and also by law provide a comparative information of financial products
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Mar 13, 2020

FSC to Ease Rules on Overseas Expansion of Financial Institutions

The FSC announced on March 12, 2020 its plans to revise the regulations on overseas expansion of financial institutions in order to ease regulatory burdens of operating overseas businesses and help boost their global competitiveness. The amendments will include streamlining the registration and reporting process and easing unnecessary requirements. The revisions will take effect gradually within this year in a two-pronged process.KEY FEATURESThe first stage amendments to the regulations include a) an expanded application of the ex post facto reporting rule for foreign direct investment, b) an improvement to the regular reporting process, and c) a simplified reporting rule for dissolving overseas businesses.I. EX POST FACTO REPORTING RULE FOR FDI(As is) In principle, all financial institutions are required to report their foreign direct investment activities before overseas investment takes place.(To be) Allow ex post facto reporting of new foreign direct investment for financial institutions with cumulative investment in the amount of USD30 million or less during the recent year.The government will work to maintain the stability in the FX market by reviewing the soundness of overseas investment businesses and through the imposition of penalties for businesses deemed to be substandard.II. IMPROVEMENT TO REGULAR REPORTING REQUIREMENT(As is) Financial companies are required to report the status of the establishment and operation of their overseas businesses to both the Financial Supervisory Service and the Bank of Korea once every three months.(To be) Financial companies will report the status of the establishment and operation of overseas businesses to the FSS once every year.The information provided to the FSS will be shared with the Bank of Korea.III. EX POST FACTO REPORTING RULE FOR DISSOLVING OVERSEAS BRANCHES(As is) When seeking dissolution of overseas business operations or making changes to the initial declaration, financial institutions are required to report
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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 12, 2020

FSC & FSS Work for Prevention of COVID-19 Spread at Financial Call Centers

The Financial Services Commission and the Financial Supervisory Service announced on March 12, 2020 a set of preventive steps taken by the financial authorities to curb the spread of COVID-19 at banking and financial call centers throughout the country.On February 10, the financial authorities sent out a guideline to all financial institutions to prevent the spread of COVID-19, which instructed them a) to establish an emergency contact and reporting system, b) to display cleaning products and disinfectants, c) to distribute instructional materials and d) to refrain from traveling.On March 10, the authorities issued an instruction to refrain from holding events such as group trainings and meetings.The authorities held an emergency meeting on March 11, a day after mass infection cases surfaced at a financial call center in Seoul, to assess the progress of the disinfection and prevention measures implemented at call centers and discuss further responses.The financial authorities will continue to work with local governments and other relevant authorities to come up with stronger preventive measures to contain the spread of virus at banking and financial call centers.* Please refer to the attached PDF for details.
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Mar 12, 2020

Vice Chairman Holds Meeting to Assess Progress of COVID-19 Financing Support

FSC Vice Chairman Sohn Byungdoo convened a meeting on March 12, 2020 to assess the implementation of the financing support for the SMEs and small merchants hit by the COVID-19 outbreak.PROGRESSBetween February 7 and March 10, a total of KRW4.6346 trillion (60,813 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► Financing by type: KRW 2.0633 trillion (32,309 cases) in new loans, KRW 2.406 trillion (25,393 cases) in maturity extensions and deferred payments, and KRW 165.3 billion (3,111 cases) in export-import credit finance, discounted interest rates and late fees and deferment of interest payment► Financing by industry: KRW703.9 billion to wholesale businesses, KRW499.8 billion to restaurant businesses and KRW485.3 billion to retail businesses► Financing by provider: KRW2.7892 trillion (42,693 cases) by policy banks, KRW1.8454 trillion (18,120 cases) by private financial institutions FURTHER PLANSThe FSC will work to maintain stability in the financial system amid the spread of COVID-19. As for call centers, the group training will be refrained. While continuing to improve the business continuity plans, the government will encourage financial institutions to draw up additional response plans to help contain the spread of COVID-19.* Please refer to the attached PDF for details.
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Mar 11, 2020

Household Loans, February 2020

The outstanding balance of household loans in all financial sectors rose KRW9.1 trillion (up 4.9% year-on-year) at the end of February 2020. The household loan balance increased KRW9.3 trillion in the banking sector (up 8.5% year-on-year) while declining KRW200 billion in the non-banking sector (down 0.7% year-on-year).By types, mortgage loans increased KRW6.9 trillion in February (up 5.0% year-on-year). Regular mortgage loans, jeonse loans and group lending expanded KRW7.8 trillion in the banking sector, while non-banks saw a drop of KRW900 billion due to the availability of refinancing products with lower interest mortgage loans. Other types of loans rose KRW2.1 trillion (up 4.8% year-on-year) due to a rise in credit lending.The government will closely monitor trends in household loans while implementing the mortgage loan regulations for homes valued higher than KRW900 million and managing credit lending through debt service ratio.* Please refer to the attached PDF for details.
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Mar 11, 2020

Loan Deferment Available for Financially Vulnerable Individuals

The FSC announced on March 11, 2020 loan deferment programs for six months for the financially vulnerable individuals affected by the COVID-19 outbreak.The programs are intended to support debtors who either have entered into a debt adjustment agreement or are recipients of microfinance policy loans and have qualified for a diminished income level due to the COVID-19 outbreak.During the grace period, extra penalties such as a downgrade in credit rating will not be imposed for the failure to make debt payments.For small merchants in traditional markets, the government will make available KRW5 billion in additional funds (up to KRW10 million for each merchant) through a microfinance scheme.* 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 10, 2020

Implementation of COVID-19 Financing Support and Business Continuity Plans

The FSC announced on March 10, 2020 its assessment on the financial institutions’ implementation of the COVID-19 financing support as well as their business continuity plans. The FSC will ensure that best practices are embraced by other financial institutions while continuing to work on improvements through daily emergency response meetings and other market monitoring mechanisms.COVID-19 FINANCING SUPPORTThe financial institutions have shown a high level of preparedness in their delivery of the COVID-19 financing support to the businesses in need. Most financial institutions have prepared a separate window principally tasked with providing services related to the COVID-19 business loans. The financial institutions have taken company-wide efforts by distributing manuals and guidelines related to the COVID-19 and circulating information about the availability of financing support in local business communities. Some of the best practice measures taken by the financial institutions include an easing of credit evaluation process for small merchants and providing an untact loan extension service to businesses.BUSINESS CONTINUITY PLANSThe FSC conducted an inspection on the business continuity plans (BCPs) of the financial institutions and other financial establishments between February 25 and March 6. The FSC found that the capital markets infrastructure, the payments systems, the financial service providers and the financial information security provider have all shown adequate levels of BCP through the operation of alternate business locations, remote system access, etc. The FSC will encourage the adoption of best practices and work on improvements of the BCP to reflect conditions on the field and global standards.* Please refer to the attached PDF for details.
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Mar 06, 2020

FSC Vice Chairman Highlights Importance of Financial Cooperation in Response to COVID-19

FSC Vice Chairman Sohn Byungdoo participated in a conference call of the Financial Stability Board Steering Committee meeting on March 5, 2020. The steering committee meeting was held to assess the effects of COVID-19 on the financial markets around the world and to share policy responses by the member countries.The following is a summary of Vice Chairman Sohn’s remarks.The financial markets in Korea remain stable, despite some signs of volatility at the beginning of the outbreak, due to the prompt responses from the government and the efforts by other countries.In order to maintain stability in the markets, the Korean government has been focusing on the following – a) taking preventive measures to contain the spread of COVID-19, b) drawing up financing support targeting the small merchants and SMEs hit by the virus outbreak as well as a supplementary budget to mitigate the economic impact of the virus, and c) strengthening market monitoring and establishing business continuity plans.Vice Chairman Sohn stated that an effective response will be difficult without close international cooperation, and called for a closer financial cooperation between countries through the FSB steering committee.* Please refer to the attached PDF for details.
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Mar 05, 2020

Government Operates Emergency Monitoring and Response System amid COVID-19 Outbreak

The FSC set up an emergency financial market monitoring and response system on March 4, 2020 to closely monitor financial market conditions and provide appropriate support to the businesses affected by the spread of COVID-19. Under this emergency monitoring and response framework, the authorities will hold daily meetings to provide prompt responses.It will be composed of the three organizations as shown below.► Financial support team: inspecting the delivery of financial support and addressing business needs and problems► Financial infrastructure team: assessing business continuity plan (BCP) for each institution and establishing an emergency response system► Financial market team: monitoring financial markets and developing contingency plans based on the severity of alert levels* Please refer to the attached PDF for details.
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Mar 05, 2020

2020 Policy Roadmap for Capital Markets

The FSC unveiled its 2020 policy roadmap for capital markets on March 4, 2020, which aims to make capital markets play a more active role in financing innovative companies. The policy plans are mainly focused on (i) providing funds tailored to company’s growth cycle; (ii) stimulating the IPO markets; and (iii) securing a transparent and advanced infrastructure in capital markets.POLICY PLANSThe government will take steps to improve the capital markets infrastructure in order to help support businesses throughout their growth cycle.I. FINANCING TAILORED TO COMPANY’S GROWTH CYCLE (FOR START-UPS) ► CROWDFUNDING: Ease crowdfuding regulations to enable companies at the stage of launching beta service or sample products to raise funds via crowdfuding by allowing unlisted SMEs and companies that have been listed on KONEX for less than 3 years to use crowdfuding; expanding the amount of fundraisings through crowdfunding; and allowing crowdfunding platforms to provide business advisory and brokerage services for securities issued through equity crowdfunding. ► START-UP ACCELERATOR: Allow securities firms to operate as start-up accelerators which engage in selecting start-up entrepreneurs, providing seed investments and incubating programs.(FOR SCALE-UPS) ► BUSINESS DEVELOPMENT COMPANY: Introduce a business development company (BDC) , which is an investment vehicle that pools money from many investors, lists itself on the stock exchange and make investments in non-listed companies.► EASING RESTRICTIONS ON SECURITIES FIRMS: Ease regulatory restrictions on securities firms in financing SMEs by permitting a new type of debt financing called venture lending; clarifying the scope of corporate lending that securities firms are allowed to extend (e.g. MA, refinancing, lending to companies in debt restructuring, etc,); and adjusting capital requirements and leverage regulations on securities firms to expand their financing capability.► HIGH-YIELD CORPORATE BOND MARKET:
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Mar 04, 2020

FSC Decides on Penalties for DLF Misselling Banks

The Financial Services Commission decided on the penalties to be imposed on Hana Bank and Woori Bank on March 4, 2020 for the misselling of derivatives-linked funds. The decision is based on the inspection results previously taken by the Financial Supervisory Service during last year.Hana Bank will be suspended from selling private equity funds for six months (from March 5 to September 4, 2020) and face a fine of KRW16.78 billion.Woori Bank will be suspended from selling private equity funds for six months (from March 5 to September 4, 2020) and face a fine of KRW19.71 billion.The disciplinary measures determined by the FSS for bank officials will be carried out by the FSS.* Please refer to the attached PDF for details.
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Mar 04, 2020

FSC Plans to Introduce Consumer Credit Bill to Enhance Financial Inclusiveness

The FSC announced on March 3, 2020 its plans to draft a bill on consumer credit and push for the enactment of the legislation within this year in order to enhance financial inclusiveness.The new legislation will replace the current Act on Registration of Credit Business, etc. and Protection of Finance Users. It will take essential provisions on the contents and procedures of loan contracts from the Credit Business Act, while establishing new regulations on delinquent debt management, termination of contracts, etc.BACKGROUNDUnder the current personal debt management system, it is extremely difficult for delinquent debtors to recover on their own while facing a risk of turning into long-term delinquent debtors.► Only about 14,000~17,000 delinquent debtors out of 26,000~28,000 every year are found to seek personal debt restructuring programs while many choose not to.► The burden of arrears and repayments as well as the pressure of debt collection cause disruptions and distress to daily lives.► The debt collection process heavily focuses on the performance of debt collection while overlooking issues related to consumer trust.KEY PROVISIONSThe improvement will focus on providing more safeguards for debtors and providing more chances to get back on their feet by modifying the structure that currently tolerates excessive debt collection practices.The government will work to establish a legal principle for a balanced approach to debt collection that takes into account not only debt collection performance but also consumer trust.I. PROVIDE TAILORED SUPPORT TO DEBTORS FOCUSING ON THEIR NEEDSEstablish a new debtors’ right through which they can request debt restructuring from financial institutions, which will help them find ways to get back on their feet and resume normal economic activities.► Delinquent debtors will have an option to request a debt restructuring program when facing diminished debt servicing capacity. Upon such a request, financial institutions will
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Mar 03, 2020

Revision to FSCMA to Enhance Transparency and Reduce Systemic Risks in OTC Derivatives Markets

A revision bill to the Financial Investment Services and Capital Markets Act (FSCMA) was approved at a cabinet meeting on March 3, 2020. With the goal of enhancing transparency and reducing systemic risks in over-the-counter (OTC) derivatives markets, the revisions will establish statutory provisions for a trade repository, which will be introduced in October 2020 through amendments to the Regulation on Financial Investment Businesses, and for margin requirements of non-centrally cleared OTC derivatives, which is currently implemented via administrative guidelines by the FSS.KEY PROVISIONS1. TRADE REPOSITORY ► REPORTING REQUIREMENT TO TRADE REPOSITORY Financial investment companies are required to report transaction information of OTC derivatives to a trade repository and may be subject to fines of up to KRW100 million for violation of reporting requirements.► AUTHORIZATION FOR TRADE REPOSITORY BUSINESS Trade repository is required to get authorization for ‘trade repository business’ and abide by regulatory requirements for executive qualifications and internal controls.► SUPERVISION ON TRADE REPOSITORY Trade repository is required to get an approval from the FSC for establishing or amending its operational rules. The FSS can inspect business operations and financial status of trade repository. The FSC may revoke authorization, suspend business operations or sanction executives of trade repository if they commit illegal activities.► PROVISION OF TRADING INFORMATION Trade repository is required to provide financial authorities, including the FSC, the FSS, and the Bank of Korea with transaction information and disclose transaction-related statistics through websites.2. MARGIN REQUIREMENTS FOR NON-CENTRALLY CLEARED DERIVATIVES Financial institutions whose balance of non-centrally cleared derivatives is more than KRW3 trillion are required to deposit margins in their transaction of non-centrally cleared derivatives.SCHEDULEThe revision bill will be submitted
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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 28, 2020

Government Unveils Additional Financial Measures to Support Businesses amid COVID-19 Spread

The government unveiled additional financing support for SMEs and small merchants hit by the spread of COVID-19 on February 28, 2020, as a follow-up to the financing support announced on February 7.FINANCIAL SUPPORT PROVIDEDBetween February 7 and 26, a total of KRW379.6 billion in new loans and guarantees were provided by policy banks and KRW607.4 billion in loan and guarantee extensions to the SMEs, small merchants and self-employed business owners whose businesses have been hit by the spread of COVID-19.Local banks provided about KRW81 billion in new loans and KRW135.8 billion in maturity extensions and deferred payments. For small businesses, credit card companies also provided about KRW9.1 billion in discounted interest rates and late fees.ADDITIONAL MEASURESI. STRENGTHEN FINANCING SUPPORT BY POLICY BANKS► For Small merchants, financing options such as low-rate loans and guarantee support will be available through the Industrial Bank of Korea and regional credit guarantee funds.a) Increase the funds available for super low or prime rate loans at the IBK from KRW1.7 trillion to KRW4.2 trillion b) Increase the funds available for guarantee support at regional credit guarantee funds from KRW16.7 trillion to KRW17.2 trillion► SMEs experiencing temporary liquidity problems are eligible to receive financial support through primary collateralized bond obligations (P-CBO) and other government-backed financing programs aimed at supporting SMEs’ facility investments.a) Expand the issuance of P-CBOs from KRW1.7 trillion to KRW2.2 trillionb) Ensure seamless implementation of financing programs (KRW3 trillion for advancing the industrial structure KRW4.5 trillion for bolstering facility investments) aimed at supporting SMEsc) Frontload the fund implementation in H1 2020II. WORK TO RELIEVE FINANCIAL BURDENS OF SMES AND SMALL MERCHANTS► (Maturity extension) SMEs and small merchants having problems with financing their businesses due to the spread of COVID-19 will be el
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Feb 28, 2020

Administrative Guidance on Mortgage Loan Regulations in Speculative Areas

The FSC will oversee the implementation of the new mortgage regulations through administrative guidance beginning on March 2, 2020 as a part of the government-wide efforts to prevent speculative demand and curb housing market overheating in the newly designated speculative areas.KEY PROVISIONSI. LTV REGULATION IN NEWLY DESIGNATED SPECULATIVE AREAS► The current loan-to-value (LTV) ratio of 60 percent will be lowered to 50 percent when purchasing homes valued up to KRW900 million in the newly designated speculative areas. For amounts above KRW900 million, a 30 percent LTV ratio will be newly applied.II. MORTGAGE LOANS FOR BUSINESSES► The current mortgage loan restrictions for businesses will equally apply to the newly designated speculative areas.III. MORTGAGE LOANS FOR HOMEOWNERS IN SPECULATIVE AREAS► Currently, homeowners with one house in speculative areas are eligible to apply for mortgage loans to purchase another home with an obligation that requires them to sell the current property within two years. While maintaining the sales requirement within two years, the new rule also obligates them to move into new home.* Please refer to the attached PDF for details.
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