Press Releases - Financial Services Commission

Press Releases

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Aug 27, 2007

Regulatory Amendment Planned for Carbon Funds

The Financial Supervisory Commission and the Financial Supervisory Service announced that regulatory amendment is planned in September for the introduction of carbon funds.The value of carbon markets worldwide has been growing at a robust pace, reaching approximately US$30 billion in 2006, a three-fold increase from the previous year, according to the World Bank (State and Trends of the Carbon Market 2007, World Bank). Interest in greenhouse gas reduction businesses and in the carbon market has been growing in Korea as well.Currently, carbon emission credit is not an asset class eligible for fund investment as enumerated under the Act on Indirect Investment Asset Management Business. But it may become eligible for fund investment with a recognition from the Financial Supervisory Commission that it is a tradable commodity with value. The planned amendment will lay out the regulatory basis for fund investment in carbon emission credits that are recognized by various national and international authorities and tradable in the carbon market.Among the key benefits expected from carbon funds are new economic incentives for greenhouse reduction businesses and the promotion of the carbon market, which will mean more efficient pricing and lower long-term cost of carbon emission credits. For investors and fund management companies, it will also mean an opportunity to engage in pro-environment investing and contribute to sustainable finance worldwide.* Please refer to the attached PDF for details.
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Aug 24, 2007

FSC to Step up Support for Korea Exchange's Bid for U.S. CFTC Contract Market Designation for KOSPI200 Futures Market

The Financial Supervisory Commission announced on August 22 that it will step up support for Korea Exchange’s application for Designated Contract Market (DCM) for KOSPI200 futures market from the U.S. Commodity Futures Trading Commission (CFTC).Currently, U.S. futures traders, including retail investors, are restricted from direct access to KOSPI200 futures market because it has not yet received DCM status from the U.S. CFTC. Thus, the participation of U.S. traders and retail investors in Korea’s futures market is expected to grow significantly when the market is granted the DCM status from the U.S. CFTC.Among the key designation criteria are the safety of futures products traded and an agreement on information exchange between the oversight authorities of the two countries. To date, the CFTC has notified Korea Exchange that the safety of KOSPI200 futures has met the DCM criteria (July, 2006). Going forward, the FSC will take steps to expedite the exchange of confirmation letters with the U.S. CFTC on supervisory exchange of information and take other support measures to accelerate the DCM approval process. Separately, the FSC plans to initiate discussions with the U.S. Securities and Exchange Commission on regulatory designation for U.S. investor’s access to Korea’s treasury futures and KOSPI200 options markets.* Please refer to the attached PDF for details.
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Aug 07, 2007

Chairman/Governor Kim Yong-Duk Takes Office at Financial Supervisory Commission and Financial Supervisory Service

The Financial Supervisory Commission and the Financial Supervisory Service announced that Mr. Kim Yong-Duk took office as the sixth Chairman and Governor of the Financial Supervisory Commission and the Financial Supervisory Service on August 6. Chairman/Governor Kim succeeds Mr. Yoon Jeung-Hyun, whose three-year term ended on August 3. Mr. Kim served as Economic Advisor to the President before assuming his new position.Chairman/Governor Kim began his career in public service at the Ministry of Finance and Economy (former Ministry of Finance) in May, 1977. After taking an overseas assignment as a Treasury Officer at the Asian Development Bank in 1982, Mr. Kim returned to the MOFE in 1989 and served at several key positions in international affairs and finance, including Secretary for Financial Affairs to the President, Director-General of International Finance Bureau, Deputy-Minister for International Affairs, and Commissioner of Korea Customs Service. In May, 2005, he was appointed Vice Minister of the Ministry of Construction and Transportation and served in that position until November, 2006, when he became Economic Advisor to the President.Chairman/Governor Kim graduated from Korea University with B.A. in Business Administration in February, 1974. He also received an MBA from Ateneo De Manila University during his tenure at the Asian Development Bank.* Please refer to the attached PDF for details.
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Jun 22, 2007

FSC/FSS to Host Second Asian Forum of Insurance Regulators in Seoul

The Financial Supervisory Commission and the Financial Supervisory Service will host the Second Asian Forum of Insurance Regulators (AFIR) in Seoul on June 27, 2007. AFIR is a gathering of insurance regulators from across Asia to promote regional dialogue and cooperation on insurance supervision and facilitate sound development of insurance markets throughout Asia. The first AFIR meeting was held in Beijing in October 2006, following a proposal by China Insurance Regulatory Commission in May 2005 to create a new forum to strengthen relations and cooperation among Asia’s regulators.Approximately thirty senior insurance supervisors from fourteen insurance supervisory authorities and the International Association of Insurance Supervisors (IAIS) are expected to participate in the Seoul meeting. The participating supervisors are China Insurance Regulatory Commission, Financial Supervisory Commission of Taiwan, Office of the Commissioner of Insurance of Hong Kong, Insurance Regulatory and Development Authority of India, Financial Supervisory Agency of Japan, Insurance Commission of Jordan, FSC/FSS of Korea, Monetary Authority of Macao, Bank Negara Malaysia, Insurance Board of Nepal, Saudi Arabian Monetary Agency, Monetary Authority of Singapore, Insurance Department of Ministry of Commerce of Thailand, and Ministry of Finance of Vietnam.Four separate sessions are planned throughout the day for discussions on risk-based supervision, insurance fraud, natural and man-made catastrophic disasters, and regional cooperation. The FSC/FSS plans to make presentations on Risk Assessment and Application System (RAAS)—a new tool implemented in April this year to better assess insurance companies’ risk profiles—and ongoing preparations for the adoption of risk-based capital. A proposal for the creation of a working group to improve solvency regime for insurance companies is also planned.* Please refer to the attached PDF for details.
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Jun 14, 2007

Bank BIS Capital Ratios, March, 2007, and Implementation of Basel II Capital Accord

Bank BIS Capital RatiosBank BIS capital ratios as of the end of March, 2007, came to 12.99%, up from 12.75% at end-2006. With bank net income totaling KRW6.6 trillion for the first three months of 2007, bank capital increased 5.0% or KRW5.9 trillion while risk-weighted assets grew 3.0%. Tier-1 capital rose 7.4% or KRW6.3 trillion, but tier-2 capital experienced a modest drop of 1.0% or KRW300 billion. The capital ratio jumped for 12 banks but fell for six others during the January-March period.Timetable for Basel II Capital AccordThe FSC/FSS is expected to finalize by the end of June new capital standards that will take effect beginning in January, 2008, under the Basel II capital accord (January, 2009, for advanced IRB approach). The FSC/FSS is also expected to commence the approval process for banks opting for IRB approach later this year.* Please refer to the attached PDF for details.
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May 25, 2007

Chairman/Governor Yoon Jeung-Hyun to Hold Roundtable Meeting in London and Deliver Keynote Speech at IIF Spring Membership Meeting in Athens

Chairman/Governor Yoon Jeung-Hyun of Financial Supervisory Commission and Financial Supervisory Service is scheduled to travel to Basel, London, and Athens from May 24 to June 3 to meet with high-level regulators, hold a roundtable meeting with senior executives of global financial firms, and deliver the keynote speech at the Spring Membership Meeting of the Institute of International Finance (IIF).In Basel, Chairman/Governor Yoon is expected to meet with Dr. Yoshihiro Kawai, Secretary General of the International Association of Insurance Supervisors (IAIS), for discussions on issues ranging from Asia’s insurance market development to progress with IAIS Multilateral Memorandum of Understanding initiative. Chairman/Governor Yoon also plans to hold a high-level meeting with BIS General Manager Malcolm Knight and Secretary General Stefan Walters of the Basel Committee for discussions on, among others, progress with Basel II and issues related to cross-border implementation of the new accord.During his stay in London, Chairman/Governor Yoon is expected to sign a Memorandum of Understanding on supervisory cooperation with Chairman Callum McCarthy of U.K. Financial Services Authority and meet with Dr. Chris Gibson-Smith, Chairman of London Stock Exchange, for discussions on global equity markets, exchange consolidation, and London’s success as a global financial center. A roundtable meeting with senior executives of international financial services firms that are active in Korea and throughout Asia is also scheduled in London. Chairman/Governor Yoon plans to stress the success Korea has had with deregulation, reinforcing market discipline, and improving the overall regulatory environment for foreign businesses and investors.In Athens, Greece, Chairman/Governor Yoon will deliver the keynote speech at the IIF Spring Membership Meeting before senior business executives of global financial firms. In his speech, Chairman/Governor Yoon is expected to emphasize the benefits
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May 17, 2007

New Electronic Foreign Investor Registration Service to Begin June 1

The Financial Supervisory Service announced that a new electronic registration service that processes foreign investors’ registration applications and issues registration certificates electronically will begin June 1, 2007.Launched as part of an ongoing effort by the FSS to continually improve Korea’s investment climate for global investors, the new electronic registration service utilizes the financial information network shared by the FSS and financial institutions for information exchange. A foreign investor using the new electronic registration service may send the registration documents via the designated financial institution (agent) and receive the registration certificate electronically. A foreign investor may designate an agent financial institution from banks, securities companies and Korea Securities Depository (KSD). Registration certificate issued by the FSS is used as a verification of the investor’s lawful identity.The new electronic registration service is a significant improvement from the current paper-based registration, under which a foreign investor submits (through an agent financial institution) the registration application along with the supporting documents to the FSS and waits up to four days for the registration certificate. Under the new electronic service, the processing time for a new registration certificate is expected to be shortened to approximately four hours.The FSS also plans to provide information on Korea’s investment procedures in English on the FSS Internet homepage (http://english.fss.or.kr/fsseng/index.jsp) beginning July 1, 2007. It will include explanations on Korea’s investor registration system, the registration procedure, and rules and regulations pertaining to investor registration. By providing easily accessible online information on investor registration in English, the FSS hopes to enhance global investors’ understanding of Korea’s investment climate and stimulate new interest in Korea’s stock marke
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May 11, 2007

IIF-FSC/FSS Strategic Dialogue on Effective Regulation

The Financial Supervisory Commission/Financial Supervisory Service jointly hosted with the Washington DC-based Institute of International Finance (IIF) Asia’s first “Strategic Dialogue on Effective Regulation” on May 10, 2007. The meeting was held in Seoul and attended by senior regulators from ten regulatory authorities and central banks in the Asia/Pacific region and executives and representatives from global financial services firms that are active in the region.In his remark, Chairman/Governor Yoon Jeung-Hyun commended the initiative taken by the IIF to encourage dialogue between regulators and globally active financial services firms and stressed the need for stepped-up efforts on harmonization of cross-border financial regulations in order to build a more effective regulatory environment across the Asia/Pacific region. To this end, he proposed that the public/private sector dialogue take place regularly as a way to build new momentum and facilitate continued progress. As a first concrete step out of the May 10 dialogue, Chairman/Governor Yoon also proposed the creation of a task force made up of representatives from the region’s regulatory community, the financial services industry, and the IIF for more in-depth discussions and exchange of public/private sector views.Since assuming the helm of the FSC and the FSS in August 2004, Chairman/Governor Yoon has been a strong advocate of cooperation among regulators and has signed MOUs on exchange of information and cooperation with 16 regulatory authorities in 11 countries. The successful conclusion of the May 10 strategic dialogue and Chairman Yoon’s proposal for continuing public/private sector engagement also highlight Korea’s commitment to promoting robust regional cooperation and building an effective regional regulatory framework that supports financial stability and economic growth in the Asia/Pacific region.* Please refer to the attached PDF for details.
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Apr 05, 2007

Bank BIS Capital Ratios, 2006

Bank BIS capital ratios at the end of 2006 averaged 12.75%, slightly down from 12.95% at end-2005. With net income of KRW13.3 trillion for 2006, bank capital increased 16.1 trillion or 15.7% from a year earlier. But the increase was offset by a 17.5% jump in risk-weighted assets totaling KRW138.2 trillion, mostly due to the growth of mortgage and SME loans. Tier-1 capital rose 15.9% (KRW11.7 trillion) and tier-2 capital 15.1% (KRW4.4 trillion).The capital ratio rose for six banks but fell for the 12 others compared to end-2005. In terms of international comparison, recent figures from IMF financial soundness indicators and others show that the 12.75% capital ratio for domestic banks is at the higher end of the 12.15%-12.76% range for U.S., U.K., and German banking organizations. With continued income growth and further room for tier-2 capital, domestic banks are expected to maintain robust capital positions going forward.* Please refer to the attached PDF for details.
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Mar 21, 2007

Signing of Statement of Protocol with U.S. PCAOB

The Financial Supervisory Commission and the Financial Supervisory Service announced the signing of Statement of Protocol (“Statement”) with the U.S. Public Company Accounting Oversight Board (PCAOB) on March 21. The Statement, signed by Mr. Yoon Jeung-Hyun, Chairman of the FSC and Governor of the FSS, and Mr. Mark Olsen, Chairman of the PCAOB, in Seoul, is intended to facilitate cooperation in matters related to the oversight of the auditors of both countries and thereby contribute to improved accuracy and reliability of audit reports.The Statement consists of four key provisions on cooperation relating to inspection, investigation, sanction, and confidentiality. In respect of cooperation in an inspection, the Statement provides that each regulatory authority may, on behalf of or in support of the other, review audit papers, conduct interviews of an audit firm’s personnel, and assess an audit firm’s quality control system. In determining sanctions for accounting firms that fall within the regulatory jurisdiction of both the FSC/FSS and the PCAOB, the Statement provides that each regulatory authority shall endeavor to take into account the laws and regulations of the other. In respect of confidentiality, the Statement calls on both the FSC/FSS and the PCAOB to hold confidential documents and information created or received in the course of cooperation.For the FSC/FSS, the signing of the Statement is the first ever with a foreign audit oversight authority, and the expectation is that the Statement will contribute to enhanced cooperation on the oversight of accounting firms between the two countries. With regulators elsewhere stepping up oversight of auditors of multinational companies whose securities are traded in their markets, the FSC/FSS will endeavor to enter into similar cooperative arrangements with other foreign regulatory authorities in order to avoid duplicate audit supervision and reduce compliance cost.* Please refer to the attached PDF for detail
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Mar 16, 2007

Road Map for the Adoption of International Financial Reporting Standards

The Financial Supervisory Commission held a ceremony together with Korea Accounting Institute on Thursday, March 15, to mark the announcement of the road map for the adoption of International Financial Reporting Standards (IFRS). Mr. Yoon Jeung-Hyun, Chairman of the FSC, gave the keynote address at the ceremony and noted that the road map marked a milestone in Korea’s embrace of global accounting standards. A number of dignitaries, including Sir David Tweedie, Chairman of the International Accounting Standards Board (IASB), and Mr. Tatsumi Yamada, a member of the IASB Board, also attended the ceremony to offer congratulatory remarks.Background of the IFRS road mapMuch progress has been made with the efforts to improve the accounting standards and strengthen the oversight of corporate financial reporting in the years following the 1997 financial crisis. But it has been generally assumed that the level of confidence of foreign investors and others in Korea’s corporate accounting has not matched the efforts undertaken thus far, in part because of accounting standards that differ from IFRS and other globally prevailing standards. With the globalization of capital markets and a growing need for accounting consistency worldwide, the road map the FSC announced on March 15 represents a major step forward that will significantly improve the comparability, the reliability, and the transparency of Korea’s corporate financial reporting in many meaningful ways.Outline of the IFRS road mapFinancial reporting under IFRS will be made mandatory for all listed companies.Simplified accounting procedures will be permitted for unlisted companies to avoid any undue compliance cost. Unlisted companies may also elect to issue financial statements under IFRS, but once IFRS is elected it may not be rescinded and replaced.Financial statements under IFRS may be reported beginning in 2009 (excluding financial service companies) and will be made mandatory for all listed companies beginning
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Mar 09, 2007

New Measures for Junk Bond Funds

The Financial Supervisory Service issued new supervisory measures for high-yield funds commonly known as “junk bond funds” pursuant to recently amended tax law provisions that apply a reduced tax rate for funds that invest 10% or more of the assets on speculative-grade corporate bonds and commercial papers.1 The new measures set forth the scope of corporate debt securities to be open to junk bond funds as well as stipulations and disclosures to be made in the investment contract and prospectus for junk bond funds.Under the amended tax law provisions, an investor who invests in a junk bond fund for more than a year and up to three years is eligible for a 5% tax rate for any gains from investment up to KRW100 million. There is no additional tax benefit for investment held in a junk bond fund beyond the three-year or the KRW100 million cap. For foreign investors, there is no limit on investment amount eligible for the reduced tax rate. These rules apply to junk bond funds that are newly created after January 1, 2007, and invest only in domestic assets with 60% or more in bonds and 10% or more in the eligible debt securities.2Debt securities designated eligible for reduced tax rateCorporate bonds rated between BB and C and commercial papers rated either B or C by at least two credit-rating companies are eligible for the reduced tax rate. Investment-grade ratings vary from AAA to BBB for bonds and from A1 to A3 for commercial papers. Speculative-grade ratings range from BB to D for bonds and from B to D for commercial papers.Investor protection measuresInvestment contracts for junk bond funds are to stipulate the portfolio requirements to be met to be eligible for the reduced tax rate.For investment in subordinated debt, which is expected to be open to junk bond funds, the investment contract should stipulate both the credit rating and the proportion of the subordinated debt to be included in the fund portfolio.The prospectus should come with full disclosures on the
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Mar 05, 2007

Asset-Liability Analysis of Domestic Banks: 2006

An asset-liability analysis of domestic banks by the FSS shows bank assets totaled KRW1,191 trillion (average account balance basis) for 2006, up 11.0% or KRW118 trillion from KRW1,073 trillion for 2005. Loans and securities made up the bulk of the assets with the proportion of loans increasing from 67.6% to 68.3% and that of securities falling slightly from 21.6% to 20.9%. A 17.9% jump in loans to small-and medium-sized companies along with a 14.4% increase in housing loans during the year mostly accounted for the changes. On the liabilities side including equity, the proportion of deposits dropped from 53.4% a year earlier to 49.6%. The rest were mostly made up by debt issues (15.4%), borrowings (13.8%), and certificates of deposits (5.6%).An increase in loans and a drop in securitiesBank loans totaled KRW879.9 trillion, up 16.9% (KRW127.1 trillion) compared with 8.4% for 2005. In particular, loans to small- and medium-sized companies rose 17.9% (KRW45.9 trillion), a marked increase from 5.1% for 2005 and 2.6% for 2004. Household loans, led by housing loans, increased 13.5% (KRW40.8 trillion).Securities, on the other hand, rose 5.1% (KRW14.9 trillion) to KRW308.6 trillion, compared to 17.4% (KRW43.6 trillion) increase for 2005.Declining share of deposits as source of bank fundsThe source of funds for increased loans in 2006 came more from debt issues and CDs, which jumped by KRW38.0 trillion and KRW13.7 trillion, respectively, than from deposits. The proportion of deposits as a source of funds fell in 2006, as did in 2004 and 2005.In particular, as a result of the growth of CMA and other short-term, higher-yield products from non-banking financial institutions as alternatives to bank deposits, the proportion of demand deposits, savings deposits, and other low-interest deposits as a source of funds continued to drop in 2006.Continuing rise of loan-to-deposit ratioWith robust loans and sluggish deposits, the loan-to-deposit ratio of domestic banks showed a continued
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Feb 02, 2007

New Disclosure Measures for Foreign Securities Issuers

The Financial Supervisory Service announced several new measures it plans to adopt in order to fine-tune disclosure regulations on foreign securities issuers toward global standards amid growing interest among foreign companies to make public offerings or list in Korea. The FSS also plans to issue a new publication entitled “Guide to Stock Offering and Listing by Foreign Issuers” that explains the stock offering and listing processes and related regulations (in Korean).Regulations on public offering and listing by foreign issuers have been continually amended and fine-tuned to global standards since 2005. They include primary listing of foreign companies and foreign holding companies along with globally accepted listing standards (Dec. 23, 2005), exemption from mandatory IPO allotment (20%) to employee stock ownership plan (Feb. 15, 2006), mandatory designation of domestic agent for investor protection (Sept. 13, 2006), and simplified reporting format for foreign issuers (Jan. 24, 2007).New Disclosure Measures for Foreign IssuersThe FSS is planning to adopt several globally accepted investor protection measures in response to public stock offering plans by foreign entities that are incorporated as holding companies offshore in places such as Bermuda and Cayman islands.Disclosure on subsidiary unitsFinancial and non-financial disclosures are to be provided on a consolidated basis for the subsidiary units of offshore holding companies in order to ensure appropriate disclosures on the business activities of subsidiary units that effectively represent the activities of the holding company.Financial disclosures include financial statements and audit opinion from an independent external auditor. Non-financial disclosures include disclosures on key business activities, board of directors, affiliated companies, management makeup, and transactions with related parties.Disclosure on corporate governance structureDisclosures on the corporate governance structure of offshor
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Feb 01, 2007

FSS to Launch Electronic Foreign Investor Registration and English DART Website

The Financial Supervisory Service will launch an electronic registration system for foreign investors and open an English DART website (http://enlgishdart.fss.or.kr) as part of an ongoing effort to simplify foreign investors’ investment procedures and improve their access to corporate information. DART, which stands for Data Analysis, Retrieval, and Transfer, is the FSS electronic disclosure system companies use to transmit regulatory filings and ongoing disclosures via the Internet.Electronic Registration of Foreign InvestorsUnder the current procedure, a foreign investor (or an agent) who wishes to acquire shares of listed companies and other exchange-traded securities submits an investment registration application along with the supporting documents to the FSS in person and returns three to four days later for the registration certificate.The new registration system, which is set to begin in May this year, will enable foreign investors to file investment registration applications and receive registration certificates electronically through financial institutions acting as their agents.Because the system utilizes information and telecommunication networks and electronic document exchange systems already used by financial institutions, no additional cost is expected from foreign investors or financial institutions. With electronic registration, the issuance of registration certificate, which numbers about 2,000 a year, is expected to be shortened from up to four days to no more than four hours.Opening of English DART WebsiteThe FSS will also open an English DART website (http://englishdart.fss.or.kr) on February 1 to improve foreign investors’ access to disclosures filed by Korea’s publicly traded companies. Foreign investors can use the English DART website to search all English disclosure documents voluntarily transmitted to DART and to Korea Exchange as well as corporate information available in English at Korea Listed Companies Association.The English DAR
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Jan 24, 2007

Preliminary Bank Net Income for 2006

Preliminary figures show domestic banks’ net income for 2006 will come to KRW13.49 trillion, compared with KRW13.63 trillion for 2005. Interest income rose KRW1.51 trillion on sharply increased lending, but the overall net earnings were held back by a KRW1.73 trillion jump in income tax expenses (partly from a drop in losses carried forward) for 2006. Operating and nonoperating income for the year totaled KRW13.26 trillion and KRW4.12 trillion, respectively.Loans outstanding at end-2006 totaled KRW873.8 trillion, up KRW122.4 trillion from end-2005 total of KRW751.4 trillion. Despite continued improvement in asset soundness, loan loss provisions fell only slightly in 2006—from KRW5.1 trillion to KRW5.0 trillion—due to more stringent provisioning requirements.ROA for 2006 fell to 1.12% from 1.27% a year earlier on reduced net interest margin. Gross profit ratio, a key measure of profitability, came to 2.82%, down slightly from 2.98% a year earlier.* Please refer to the attached PDF for details.
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Jan 18, 2007

FSC Proposes to Merge Korea Exchange's Dual Futures Trading Systems into Single Trading System

The Financial Supervisory Commission announced a proposal to integrate the dual futures trading systems of Korea Exchange into a single integrated trading system in order to facilitate trading in futures and improve market efficiency. Currently, two different futures trading systems—KOSPI futures trading system and Korea Treasury Bond (KTB) futures trading system—that were used by Korea Stock Exchange (KSE) and Korea Futures Exchange (KOFEX) before they were brought under the Korea Exchange are in use. Because of its dual nature, the current trading system is said to inflate transaction cost to investors and create system inefficiencies.Under the FSC proposal, tentatively set to be implemented by end-June this year, the KOSPI futures trading system is to be adopted at the Korea Exchange for all futures and options trading as it already effectively handles nearly all of futures and options trading, including KOSPI200 futures, KOSPI200 options, Star index futures, and stock options. The KOSPI futures trading system also has the advantages of familiarity to investors, significant cost-effectiveness compared to the KOFEX system, and locally developed technologies.When the integration is completed, investors and traders are expected to benefit from simpler and more consistent trading rules (e.g., buying and selling of futures and options with a single trading account), while the Korea Exchange is expected to save KRW2.2 billion in system maintenance cost a year.* Please refer to the attached PDF for details.
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Jan 12, 2007

FSS Launches Online Search & Retrieval Tool for Legal and Regulatory Statutes Governing Financial Supervision

The Financial Supervisory Service opened a new online search retrieval system for legal and regulatory statutes governing financial supervision along with their interpretations and applications on January 9. The new tool, a Korean-based website database that can be launched from the FSS Internet homepage, holds more than 1,900 separate entries (over 30,000 pages) on legal and regulatory statutes pertaining to financial supervision as well as their administrative and judicial interpretations and applications and explanation of FSS administrative procedures and financial supervision. The database for the new search retrieval system is set to be updated each month and is expected to increase by approximately one thousand new entries a year henceforth.BackgroundBecause of the generally complex nature of legal and regulatory statutes governing financial products and services, there has been a growing awareness of the need to make financial laws and regulations more accessible to the general public. The new online tool was prompted by this need to help the general public search and access financial laws and regulations more easily and at the same time improve regulatory transparency.The plan for the new system took shape in August, 2006, when the FSS proposed an open search retrieve system after thorough review and study of similar systems in use elsewhere. The system was completed in late 2006 and went online January 9 after a series of operational tests.A Centralized Database of Legal and Regulatory Statutes Governing Financial SupervisionThe new search retrieve system is designed to function as a centralized database of all the legal and regulatory statutes, guidelines, interpretations, and explanations governing financial supervision. In particular, the new online tool employs a system of codification to classify and group interpretations and explanations of legal and regulatory precedents by year, financial sector, business operation, and laws regulations.Use of the
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Jan 05, 2007

Regulation on Supervision of Electronic Financial Transactions Taking Effect January 1, 2007

The FSC/FSS announced new rules and regulations on electronic financial transactions that pave the way for the oversight of financial service providers facilitating electronic financial transactions in support of the Electronic Financial Transactions Act that took effect January 1, 2007.* The new rules and regulations, which also took effect at the beginning of the year, are primarily aimed at ensuring the security of electronic financial activities and protecting consumers. The following is an outline of the newly announced rules and regulations.Ensuring Security of Electronic Financial Transactions- User authentication and OTPUser authentication programs must be used as a rule in all electronic financial transactions except for cases where the amount to be transacted is trivial, or the application of user authentication program is technically not feasible. One-time password (OTP) or other one-time security codes must be used in all online financial transactions. (A few exceptions may apply for cases involving the use of ATM for money transfers and other similar activities.)- Use of PIN-padPIN-pads or other similarly secure input devices must be used when receiving customer PIN to keep it safe and secure from others.- Contingency plans and operational disaster recovery centersFinancial institutions and other electronic financial service providers must maintain backup facilities or redundancies for the critical IT networks and telecommunication systems. Banks, securities firms, and other large financial institutions whose network failure can disrupt the IT networks and the telecommunication systems must maintain operational disaster recovery centers. Financial institutions must also develop operational manuals and personnel management for the protection of the critical IT systems.Consumer Protection- Insurance for financial incidentsFinancial institutions are to be held liable for damage for financial incident unless it occurred because of gross negligence or fraudu
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Dec 21, 2006

Bank BIS Capital Ratios, September 2006

Bank BIS capital ratios averaged 13.10% at the end of September, compared with 13.06% at end-June and 13.00% at end-2005. Bank capital rose KRW14.6 trillion (14.2%) on net income totaling KRW11.5 trillion for the first nine months of the year, while risk-weighted assets increased KRW105.5 trillion (13.3%) during the same period. Tier-1 capital rose 16.5% (KRW12.2 trillion) compared with an 8.3% increase (KRW2.4 trillion) for tier-2 capital.The capital ratio rose for seven banks but fell for the 11 others compared to end-2005. For some of the banks with a lower capital ratio than at end-2005, increases in capital did not keep pace with increases in risk-weighted assets. But all the 18 banks reported capital ratios in excess of 10% and expect to maintain strong capital positions going forward with solid net income.* Please refer to the attached PDF for details.
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