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Jun 13, 2024
- Short Sale Ban Extended Until March 30, 2025
- The Financial Services Commission held an extraordinary session on June 13 and decided to extend the period of enforcing short sale ban currently set to expire at the end of this month until March 30, 2025. However, covered short selling by market makers and liquidity providers will continue to be allowed in the same way as before. On November 5, 2023, the FSC decided to ban short selling in domestic stock markets against the backdrop of growing market uncertainties and the uncovering of large-scale illegal short sale activities carried out by global investment banks, leading to concerns about disruption in fair pricing function and undermining trust in the capital market. Since then, the government and related authorities carried out investigations into the situation and found out cases of naked short sale activities amounting to some KRW211.2 billion. At the same time, the authorities have worked to seek fundamental solutions to overhaul the system to prevent illegal short sale activities. To this end, until the end of March 2025, the authorities plan to set up a completely electronic short sale processing system that can prevent naked short selling. First, the Financial Supervisory Service (FSS) will provide relevant guidelines to ensure that institutional investors can set up their own internal short position balance management system within this year. The Korea Exchange (KRX) plans to finish up developing the Naked Short-selling Detection System (NSDS) by the end of March 2025, which will function as a central monitoring system allowing authorities to compare and scrutinize the balance and over-the-counter (OTC) transactions information of institutional investors. The FSC expects that resuming short selling activities without the establishment of such electronic processing and monitoring systems risks the recurrence of illegal short sale activities in large scale. Therefore, to establish the electronic short sale processing and monitoring systems that can help
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Jun 13, 2024
- Short Sale Reform Measures Introduced to Prevent Illegal Trading Activities and Protect Investors
- The Financial Services Commission announced the finalized version of short sale reform measures on June 13, which include plans to establish a completely electronic short sale processing system until March 2025, limit the length of stock repayment period for both institutional investors and retail investors to maximum 12 months, and strengthen the severity of penalties on illegal short sale activities when the amount of unfairly gained profits is KRW5 billion or more. In November 2023, the FSC decided to ban short selling in domestic stock markets (until the end of June 2024), because authorities became concerned about naked short selling activities taking place routinely, which could potentially disrupt domestic stock markets fair pricing function. Since then, public debates and discussions have taken place to make improvements to the short selling system, and the ruling party and the government held a consultative meeting to announce the finalized set of reform measures on June 13. Background On November 16, 2023, the FSC introduced its plan to seek short sale reform measures at the meeting held with representatives from the private sector, the ruling party of the National Assembly, and related authorities. The issue of developing an electronic short sale processing system, which was discussed multiple times previously, has been thoroughly dealt with in taskforce meetings jointly led by the Financial Supervisory Service (FSS) and the Korea Exchange (KRX). After having active communication with market participants, including foreign investors, the authorities have come up with a set of practical measures for developing an electronic short sale processing system. In addition, the authorities have had a series of meetings and discussions with experts, industry representatives, and the public to collect wide-ranging opinions on the overall stock short sale system before arriving at this finalized set of reform measures. Meanwhile, the authorities have continued to mak
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Jun 12, 2024
- Household Loans, May 2024
- In May 2024, the outstanding balance of household loans across all financial sectors rose KRW5.4 trillion (preliminary), growing at a faster rate compared with the previous month (up KRW4.1 trillion). * Change (in trillion KRW, m-o-m): +0.1 (Dec 2023), +0.9 (Jan 2024), -1.9 (Feb), -4.9 (Mar), +4.1 (Apr), +5.4 (May)p (By Type) Home-backed mortgage loans rose KRW5.6 trillion, growing at a faster rate compared with the previous month (up KRW4.1 trillion), as the banking sector saw a significant growth in mortgage loans (up KRW4.5 trillion up KRW5.7 trillion). Other types of loans declined KRW0.2 trillion as the banking sector saw the slowing pace of growth (up KRW0.6 trillion up KRW0.3 trillion) and the decline continued in the nonbanking sector (down KRW0.5 trillion down KRW0.6 trillion). (By Sector) Household loans edged up at a faster rate in the banking sector, while the pace of the decline slowed in the nonbanking sector. In May, banks saw a rise of KRW6.0 trillion in household loans, which went up from the growth of KRW5.1 trillion a month ago. The rising trend in the banking sector can be explained largely by the growth in mortgage loans (up KRW4.5 trillion up KRW5.7 trillion) led by housing market recovery and by recent changes made in household loan statistics, which began to take into account certain types of housing loans that were excluded previously. Other types of loans also continued to grow due to seasonal factors, but the pace of growth slowed compared with the previous month (up KRW0.6 trillion up KRW0.3 trillion). In the nonbanking sector, household loans dropped KRW0.7 trillion. Mutual finance businesses continued to see a decline (down KRW1.6 trillion), while specialized credit finance companies (up KRW0.7 trillion), savings banks (up KRW0.1 trillion), and insurance companies (up KRW0.1 trillion) all saw household loans edging up. (Assessment) In May 2024, the growth in household loans was caused largely by the increase in mortgage loans in the ban
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Jun 10, 2024
- Authorities Introduce Guidelines for Determining When Non-fungible Tokens Qualify as Virtual Assets
- The Financial Services Commission introduced guidelines on non-fungible tokens (NFTs) on June 10 to provide clear standards and examples on determining when NFTs should be considered as virtual assets. Background A non-fungible tokens (NFT) is a digital token carrying a unique identifier, which makes it irreplaceable (non-fungible). NFTs are issued in limited quantities mostly for trading of digital content, such as videos or images. Due to this tendency, the number of owners for the same NFT is limited as well as the occurrence of secondary market trading, which makes NFTs less prone to large-scale user damages, to which virtual assets are often made vulnerable. In addition, from the perspective of promoting development of blockchain technology and seeking regulatory reforms to this end, NFTs qualify as an advanced digital asset. Against this backdrop, when the Act on the Protection of Virtual Asset Users becomes effective on July 19 this year, the FSC plans to exclude certain types of NFTs that meet qualified standards from the scope of virtual assets that will come under its legal purview. However, digital tokens that are presented in an NFT format but in effect qualify as virtual assets will be subject to this law. As this legislation on the protection of virtual asset users will enter enforcement this year for the very first time, the authorities have prepared a set of guidelines to provide clear standards for determining when and how NFTs are considered as virtual assets to help improve predictability and remove obstacles in the application of law. Regulations in Major Countries In major countries, the legal characteristics of NFTs are determined not based on their format or technology but depending on their content, or their practical characteristics. In the U.S., NFTs are scrutinized in the same way as for virtual assets to determine whether they qualify as a security and whether to apply securities regulations. In effect, in 2023, the Securities and Exchang
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Jun 07, 2024
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Jun 03, 2024
- FSC Proposes Rule Changes to Upgrade Regulations on Treasury Stocks of Listed Companies
- The Financial Services Commission issued a preliminary notice of proposed rule changes concerning treasury stocks of listed companies on June 3. This proposal is a follow-up to the previously introduced plan to upgrade rules on treasury stocks of listed companies, which was unveiled on January 30 this year. The reform proposal will bring about changes to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and its subordinate regulations on the issuance and disclosure of securities, and it will be available for public comment from June 4 to July 16. The proposed rule changes are intended to (a) restrict allocation of new shares to treasury stocks when companies spin-off business units (also in mergers and acquisitions), (b) strengthen disclosure duties throughout the course of acquiring, holding, and disposing treasury stocks, and (c) close loopholes and remove regulatory arbitrage in the process of acquiring and disposing treasury stocks. First, allocating new shares to treasury stocks will be prohibited when companies spin-off their business units, which will help to better protect the rights and interests of general shareholders. When it comes to treasury stocks, currently, almost all shareholders rights, such as voting rights, dividend rights, and preemptive rights, are non-exercisable. However, due to the lack of clarity in statutory provision and court precedents, there have been cases where new shares were allocated in corporate spin-offs. This strategy was often used by companies to bolster control of largest shareholders, instead of making use of treasury stocks to boost shareholder value, which has been pointed out as a problem. Moreover, this has remained inconsistent from the perspective of global regulatory standards. Therefore, the Enforcement Decree of the FSCMA will be revised to restrict allocation of new shares to treasury stocks in corporate spin-offs of listed companies. Second, disclosure duties on treasury
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May 29, 2024
- Loan Transfer Service Offering Lower Interest Rates to be Made More Accessible and Inclusive
- The Financial Services Commission held a meeting with users of the loan transfer service program and officials from related organizations and financial companies on May 29 to commemorate one-year anniversary of launching the loan transfer service and have discussions on seeking further improvements. At the beginning of the meeting, FSC Chairman Kim Joo-hyun praised the successful introduction of loan transfer servicefirst for credit loans in May 2023 and then expanded to home-backed mortgage loans and jeonseloansduring the first year of its operation. As a result, Chairman Kim said that about 200,000 individuals were able to use this program to switch their existing loans worth about KRW10 trillion in total for lower interest rates, and on average were able to save about KRW1.62 million a year in interest payments. To continue to meet consumer demands, Chairman Kim said that financial companies need to think beyond just offering lower interest rates and take steps to help improve consumer convenience in accessing and operating loan transfer service, for instance, by offering on-site application process for the elderly to make the program more accessible and inclusive for all. During the first year of operation, in cumulative terms as of May 24, 2024, there were 202,461 individuals who took advantage of the loan transfer service and switched to lower interest rate loans. The total amount of loans switched for lower interest rates during this period amounted to about KRW10.1 trillion. For credit loans, which became available on May 31, 2023, 168,254 individuals used the loan transfer service for about KRW3.97 trillion. On average, their interest rates dropped by 1.57 percentage points, and borrowers were able to save about KRW580,000 a year per person. For mortgage loans, which became available on January 9, 2024, 24,721 individuals used the loan transfer service for about KRW4.54 trillion. On average, interest rates dropped by 1.49 percentage points, and borrowers we
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May 27, 2024
- Rule Changes Proposed to Bring About Improvements to the Convertible Bond Market
- The Financial Services Commission issued a preliminary notice of proposed rule changes regarding the issuance and disclosure of securities, which will be open for public comment from May 28 until June 11, 2024. The proposed rule changes deal with strengthening disclosure requirements on the issuance and circulation of convertible bonds (CBs), including bonds with warrants and (redeemable) convertible preference shares, and upgrading the rules and procedure on refixing convertible prices of CBs to make them more reasonable. First, the revised regulation will strengthen disclosure requirements on the issuance and circulation of CBs. Under the current regulation, when issuing CBs, companies are required to disclose information about the entity who shall exercise the call option. However, in most cases, companies provide only a vague statement of company or company-designated entity in their disclosure filing, which makes it difficult for investors to clearly understand about the entity exercising the call option. To improve upon this situation and to help increase predictability for investors, the proposed rule change will require companies to file material information disclosures when designating an entity for exercising the call option or if the right to exercise the call option has been transferred to a third-party. In addition, the practice of converting CBs into stocks after acquiring CBs close to their maturities and reselling them to the largest shareholder has been identified as a concern for unfair trading activities in capital markets. Although the practice of reselling CBs prior to their maturities is in essence similar to issuing new CBs, there has been lack of sufficient information being provided in the market thus far. Therefore, to address this problem, the proposed rule change will require companies to file material information disclosures when acquiring CBs close to their maturities with detailed information, such as reason for acquisition, plans for
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May 27, 2024
- FSC Announces Measures to Support Covered Bond Market to Facilitate Supply of Long-term, Fixed Rate Mortgages
- The Financial Services Commission announced that an agreement signing event was held between Korea Housing Finance Corporation (HF) and five major commercial banks to facilitate payment guarantees on covered bonds on May 27. In accordance with this agreement, HF will begin to provide payment guarantee service on covered bonds issued by banks starting from May 27. This is part of the broader set of government plans intended to support the covered bond market with aims to increase the supply of long-term, fixed interest rate mortgage products by commercial banks. Through HFs payment guarantee service, commercial banks are able to issue covered bonds at lower interest rates and investors are able to invest in safe, long-term assets, which require relatively little capital costs. For instance, with HFs payment guarantee service, covered bonds issued by banks with an AAA rating will have 5 to 21 basis points lower interest rates for issuance, when compared to typical bank bonds with same maturities. Therefore, if banks are incentivized in this way to reduce funding costs, this will encourage them to provide more long-term, fixed interest rate mortgage products at lower interest rates. HF also plans to seek re-securitization of covered bonds. Under this program, HF will purchase 10-yr covered bonds issued by banks, for instance, and through a settlor-trustee trust, issue asset-backed securities and sell them. This program will facilitate the issuance and purchase of long-term covered bonds in the market, and the supply of long-term funds raised this way can be put to use in providing long-term, fixed interest rate mortgages for houses valued more than KRW600 million, which is currently unavailable under the policy mortgage loan program. In line with the introduction of HFs payment guarantee service, there will be other types of incentives for banks and financial institutions. First, when issuing covered bonds with 10-yr or longer maturities, banks will be allowed to use (
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May 21, 2024
- Authorities Meet to Discuss Progress and Plan for Temporarily Eased Financial Regulatory Measures
- The Financial Services Commission held a meeting with related authorities and industry associations to check progress and discuss further plans for the temporarily eased financial regulatory measures on May 21. At todays meeting, authorities reviewed the prudential management and liquidity situation in each sectorbanks, financial investment companies, specialized credit finance businesses, and savings banksand discussed further plans for extending the availability of eased regulatory measures that are scheduled to expire at the end of June this year. At the meeting, participants assessed that considering current market conditions showing signs of stability and financial sectors response capacity, financial companies are expected to be able to maintain regulatory ratios even with the termination of the eased regulatory measures. However, given the potential of growing uncertainties in the future, participants agreed that some of the eased regulatory measures need to be made available on an extended basis. In this regard, first, the authorities discussed the need to gradually roll back the easing of liquidity coverage ratio (LCR) in the banking sector, which was first introduced in April 2020 in the wake of the COVID-19 pandemic, by raising banks LCR requirement from the current level of 95 percent to 97.5 percent for the second half of 2024. Most banks are currently operating with their LCRs exceeding 100 percent. Although the level of bank bonds issuance has been rising somewhat, considering bond market conditions and expectations for future demand for funds, the recent rise in bank bonds issuance is not expected to have a significant impact on the flow of funds. The banks LCR requirement, in this regard, is scheduled to be raised by 2.5 percentage points every six months, while the authorities will need to review market conditions in the fourth quarter of 2024 to decide further plans from January 2025 and thereafter. Second, the authorities discussed and decided to
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May 20, 2024
- FSC Proposes Rule Changes to Ensure Steady Supply of Funds for Microfinance Assistance
- The Financial Services Commission proposed rule changes in the Enforcement Decree of the Microfinance Support Act to ensure the provision of steady supply of funds for microfinance assistance on May 20. The Korea Inclusive Finance Agency (KINFA) has been expanding the level of microfinance support being provided to vulnerable individuals in recent years against the backdrop of the COVID-19 pandemic, continuation of high interest rates and high prices, and the growing need to protect vulnerable borrowers and prevent damages caused by illegal private lending activities. With interest rates and prices expected to stay higher for longer, there is a continuing need to bolster the provision of microfinance assistance to help vulnerable individuals. In this regard, the FSC is announcing a revision proposal for the Enforcement Decree of the Microfinance Support Act, which will temporarily increase the rate of contributions financial companies make in relation to the size of their handling of household loans, while providing a temporary reduction in the required amount of contributions for financial companies that are actively supplying policy-based microloan products. First, the rate of contributions financial companies make in relation to the size of their household loans will increase by 0.005 percentage points in the banking sector to 0.035 percent and by 0.015 percentage points for insurance companies, mutual finance businesses, specialized credit finance businesses, and savings banks to 0.045 percent. Currently, all financial companies are subject to the same contribution rate of 0.03 percent. The increased contribution rates will be in place until December 31, 2025. Second, a reduction of 0.5 percentage points in contribution amounts will be granted to the financial companies making active efforts in handling policy-based microloan products until December 31, 2025. KINFA will evaluate the performance of financial companies in supplying policy-based microloan products.
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May 16, 2024
- FSC Approves DGB Daegu Bank's Transition from Regional Bank to Nationwide Operator
- The Financial Services Commission decided to approve DGB Daegu Banks application to make a transition from a region-specific operator to a nationwide commercial bank at the 9th regular meeting held on May 16. The FSCs approval will introduce a new nationwide commercial bank for the first time in 32 years since 1992, bringing the total number of nationwide banks to seven. On July 5, 2023, the government announced plans to allow regional banks transition to become nationwide banking business operators as part of its broader policy to promote fair and effective competition in the banking sector. As a follow-up measure, on January 31, 2024, the FSC and the FSS introduced specific method and procedures for authorizing a regional banks transition to operate as a nationwide bank. Following this, on February 7, 2024, DGB Daegu Bank applied for the modification of conditions specified under the Article 8 of the Banking Act. Upon receiving the application, the FSC and the FSS then went through a careful review process by having an external review committee and reached a decision that DGB Daegu Bank meets all the regulatory requirements necessary to be authorized to operate as a nationwide commercial bank. With DGB Daegu Bank making a transition to operate as a nationwide operator, the authorities expect that there will be enhanced competition between banks with increased benefits and convenience afforded to consumers. DGB Daegu Bank plans to open 14 new branches in the Seoul metropolitan area and across regions spanning from Chungcheong-do and Gangwon-do, which will help to boost the level of access to financial services for consumers residing in these regions. In addition, DGB Daegu Bank plans to improve customers access to financial services through advancement of its own service application and expanded partnership with third-party platforms, so as to help reduce costs and offer low interest rate products to consumers. DGB Daegu Bank will also expand credit supply to the s
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May 16, 2024
- FSC Chairman Holds Meeting on Promoting Investment for Startups and Venture Businesses
- Chairman Kim Joo-hyun of the Financial Services Commission held a meeting on promoting investment for startups and venture businesses on May 16. At the meeting, participants went over the progress of policy measures implemented since April last year, which were intended to boost funding support for innovative startups and venture businesses and bolster their competitiveness amid the investment crunch experienced by startup businesses. Backed by the active role of policy funds, experts at the meeting assessed that the investment situation shows signs of recovery and that the situation in domestic market appears to be faring better than those seen in overseas markets. A group of businesses that have benefited from particular policy measures also attended the meeting to share their experiences in (a) expanding business operation through MA, (b) taking advantage of the program intended to assist businesses operating outside the Seoul metropolitan area, and (c) going overseas or attracting investment from overseas. These businesses requested that these policy support measures made available on an ongoing and expanded basis. After reviewing the status of funding support made available for startups and venture businesses by Korea Development Bank, Industrial Bank of Korea, Korea Credit Guarantee Fund, and Korea Growth Investment Corporation, Chairman Kim outlined plans for this years startup and venture investment support. First, a total of KRW15.4 trillion in policy funds will be supplied, an increase of about 30 percent from the previous year, to ensure the provision of seamless funding support for up-and-coming startups equipped with technological prowess. Through IBKs venture investment program, some KRW500 billion or more in funding support will be provided to early-state startups. In addition, KDB-IBKs secondary fund worth KRW1.2 trillion has already begun with its investment projects in May this year to facilitate functions and improve conditions in the secondary ma
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May 16, 2024
- KoFIU Unveils H2 2023 Survey Results on Virtual Asset Service Providers
- The Korea Financial Intelligence Unit (KoFIU) conducted a survey on the twenty-nine registered virtual asset service providers (VASPs) to see the current state of the domestic virtual asset market and keep relevant statistics up to date. Survey Overview (Respondents) 29 VASPs(22 exchange service providers and 7 wallet and custodian service providers) (Survey Method) Data collected from VASPs (Period Covered) July 1, 2023 to December 31, 2023 Key Survey Findings for H2 2023 The domestic market for virtual assets in H2 2023 saw increases in terms of average daily trading volume (up 24%), market capitalization (up 53%), total operating profits (up 18%), and total volume of deposits in KRW (up 21%), as virtual asset prices increased and investment sentiment recovered. The total number of users eligible to trade (up 6%) also turned back up from the decline seen in the first half of 2023. When compared with the survey results of H1 2023, in the latter half of the year, the KRW-based exchange service providers saw a notable increase in new listings (up 70%), while the coin-only exchange service providers experienced a significant number of delistings (down 82%), which brought down the total number of virtual asset types available for trade (down 3.5%). Especially, the number of exclusively listed virtual assetsthose tradable via single VASP in domestic marketdropped considerably (down 9.3%). Maximum drawdown, or price volatility, still remained high at 61.5 percent (62.4% in H1 2023). External transfers of virtual assets by exchange service providers also increased considerably (up KRW8.4 trillion, or 28%). Among them, those transferred to the registered entities under the travel rule rose rapidly (up KRW3.8 trillion, or 57%). As of the end of December 2023, there were two coin-only exchange service providers and two wallet and custodian service providers that announced plans to terminate their business operations. As there are growing numbers of VASPs closing down their b
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May 16, 2024
- 2024 Korea Fintech Week Scheduled for Aug 27-29
- The Financial Services Commission announced that this years global fintech expo, 2024 Korea Fintech Week, is scheduled to be held for three days from August 27 to August 29 at Dongdaemun Design Plaza (DDP) in Seoul. Last year, Korea Fintech Week attracted some 11,000 visitors and provided fintech businesses with diverse opportunities to pitch new fintech business ideas and attract investments. The sixth annual fintech expo this year, which will be organized jointly with related organizations, agencies, and industry groups, will offer a venue for invigorating the fintech industry and accelerating innovation in financial services. Since the adoption and use of generative AI across different fields is taken as a key to boosting innovation and productivity these days, this years Korea Fintech Week will be held under the theme of Beyond Boundaries: Fintech and AI Redefining Finance to more closely highlight the effects of AI on the fintech and financial sectors. Exhibition halls will be prepared, inviting fintech businesses and financial companies to set up booths for promoting and demonstrating their latest and innovative financial technologies that will help to boost user convenience. A series of fintech theme-based seminars are scheduled to be made available throughout the three-day period, which will provide participants and visitors with opportunities to share global trends and insights and have in-depth discussions on diverse topics, such as the adoption and use of new AI technology, cyber and information security, ESG, insurtech, and so on. A mobile business meeting platform is planned to be introduced this year to support networking among fintech industry officials and to give chances to more effectively pitch new business ideas and secure investments. The IR Open Stage and the Networking Lounge will be operated on an expanded basis. In addition, there will be much enhanced investment promotion programs for up-and-coming fintech businesses via Korea Development B
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May 13, 2024
- Household Loans, April 2024
- In April 2024, the outstanding balance of household loans across all financial sectors rose KRW4.1 trillion (preliminary) from the previous month. When compared with the end of 2023, the household loan balance dropped KRW1.8 trillion, which shows that the growth trend remains on a stable course. * Change (in trillion KRW, m-o-m): +2.6 (Nov 2023), +0.1 (Dec), +0.9 (Jan 2024), -1.9 (Feb), -4.9 (Mar), +4.1 (Apr)p (By Type) Home-backed mortgage loans increased KRW4.1 trillion as the banking sector saw a significant growth in mortgage loans (up KRW0.5 trillion up KRW4.5 trillion). Other types of loans went up KRW0.03 trillion from a month ago (down KRW5.0 trillion) as the banking sector saw an increase of KRW0.6 trillion, while the nonbanking sector saw a slower pace of decline (down KRW2.8 trillion down KRW0.6 trillion). (By Sector) Household loans edged back up in the banking sector while declining at a slower pace in the nonbanking sector. Banks saw a rise of KRW5.1 trillion in household loans compared with the previous month as relevant statistics on household loan data began to incorporate certain types of housing loans previously excluded from household loan statistics but classified instead as policy funds. Banks issuance of new mortgage loans also expanded from a month ago (up KRW2.0 trillion up KRW3.6 trillion). A series of initial public offerings scheduled in April-May also pushed up the volume of credit loans temporarily. In the nonbanking sector, household loans fell KRW1.0 trillion. Although the pace of the decline slowed compared with the previous month (down KRW3.3 trillion), the overall trend since the second half of 2022 has steadily shown a slowing trend. Mutual finance businesses continued to see a decline (down KRW2.1 trillion) in household loans, while specialized credit finance companies (up KRW0.6 trillion), savings banks (up KRW0.5 trillion), and insurance companies (up KRW0.01 trillion) all saw growth led by increase in credit loans. (Assessment
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May 13, 2024
- FSC and FSS Announce Measures to Seek an Orderly Soft-landing in the Real Estate Project Finance Market
- The Financial Services Commission and the Financial Supervisory Service announced measures to seek an orderly soft-landing in the real estate project finance market on May 13, expanding upon the series of previously introduced measures aimed at stabilizing the market. Background Since the second half of 2022, the government has been working to facilitate an orderly soft-landing in the real estate project finance market through various market stabilization programs designed to stabilize financial markets, such as the PF-ABCP (project finance asset-backed commercial paper) market and bond market, and by providing funding support to the development projects that are considered to be financially viable, while encouraging restructuring or liquidation of projects that are deemed to be unviable. Corporate bond spreads, which stood at 109 bps at the end of September 2022, rose quickly to 177.2 bps on December 1, 2022 due to market anxieties about PF-ABCPs. However, as the government and the private sector actively took steps to respond in a timely manner, by introducing the corporate bond market stabilization fund and the PF-ABCP purchase program, bond market conditions began to stabilize since after January 2023, and corporate bond spreads as of the end of April 2024 stood at 46.6 bps. Spreads on commercial paper (CP) also spiked to 240 bps on November 23, 2022, but have come down to the recent level of 68 bps, showing signs that financial market conditions have returned to stability. To facilitate funding of the development projects that are operating on solid financial grounds, the government introduced a project finance guarantee program worth KRW30 trillion in October 2022, from which about KRW18 trillion has been implemented thus far in support for projects making a transition from bridge loans to project finance loans. Along this line, in September 2023, various lending support programs were also introduced to assist construction companies via policy financial instit
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May 09, 2024
- Authorities Introduce ATS Operation Plan to Promote Improvement in Capital Market Infrastructure
- The Financial Services Commission announced that Koreas first alternative trading system (ATS), Nextrade, will begin to operate in domestic market starting in the first half of next year. This will mark the operation of a multiple and competition-based stock trading system in Koreas capital market as in the case with those found in major overseas economies. Introducing an ATS has been a key part of the governments capital market reform initiative, and it is intended to make domestic capital market more accessible for investors with enhanced convenience for transactions. With the operation of an ATS, stock trading hours will be extended to twelve hours a day from 08:00 am to 08:00 pm. Also, as more order types will become available for investors with enhanced competition to help lower fees, transaction costs will be reduced and trading convenience improved for investors. Seminar on ATS Operation Plan The FSC held a seminar on the measures for operating ATS with the Korea Financial Investment Association, Korea Exchange (KRX), and Nextrade on May 9. As the preliminary approval for operating an ATS was granted to Nextrade in July 2023, the FSC and related organizations have since worked on the measures for ATS operation and plans for ensuring effective market oversight in a comprehensive and integrated manner. At todays seminar, the authorities unveiled the measures and held discussions with market participants. FSC Vice Chairman Kim Soyoung delivered congratulatory remarks at the beginning of the seminar and emphasized the importance of ensuring stability and fairness in market management. Vice Chairman Kim also asked participants to thoroughly prepare for the official launch of an ATS and to ensure that investors are kept posted with relevant information. In addition, Vice Chairman Kim said that the financial authorities will work to prepare guidelines and revise relevant rules and regulations necessary for the operation of an ATS. A New Stock Trading Experience With
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May 02, 2024
- Guidelines on Corporate Value-up Plan Unveiled to Support Listed Companies' Voluntary Efforts to Boost Corporate Value
- The Financial Services Commission (FSC), the Korea Exchange (KRX), Korea Capital Market Institute (KCMI) and relevant organizations held the second seminar on the Corporate Value-up Support Plan on Thursday, May 2. At todays seminar, the draft Guidelines for Corporate Value-up Plan, one of key pillars of the Corporate Value-up Program, was unveiled to gather opinions from various stakeholders. Congratulatory Remarks by FSC Vice Chairman FSC Vice Chairman Soyoung Kim delivered congratulatory remarks reaffirming the governments strong will towards capital market reforms. In addition to regulatory reform initiativesin our capital markets that the government has made over the past two years, listed companies value enhancement efforts will help Koreas stock market tackle Korea discount and rise steadily over mid-to long-term, Vice Chairman said. Regarding the draft Guidelines on Corporate Value-up Plan unveiled today, Vice Chairman emphasized the importance of such plans, saying that corporate value-up plans will enable listed companies to communicate with shareholders and market participants about a comprehensive picture over the companies future, and allow investors to better understand companies in which they are going to invest in and make well-informed decision, thereby listed companies will be able to get proper market valuation for their true intrinsic value or expected value. He added that the corporate value-up program shall be deemed as a long-term initiative. In this regard, the guidelines unveiled today are not the end, but the beginning of our long-term plan, Vice Chairman said. Various incentives and support measures including guidelines, consulting, training, etc, will be provided to encourage active participation of listed companies, and then investors will properly evaluate companies value enhancement efforts and reflect them into their investment decision. The government and relevant organizations will continue to support companies corporate value-up ef
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Apr 30, 2024
- FSC to Promote Investment in Climate Technology Sector
- Chairman Kim Joo-hyun of the Financial Services Commission attended the technology fund agreement ceremony on April 30. This agreement ceremony is a second follow-up measure for expanded financial support measures for climate crisis response after its first follow-up measure the ceremony for the establishment of the Future Energy Fund, which supplies venture capital for the expansion of renewable energy facilities, including offshore wind power. The FSC plans to invest a total amount of KRW9 trillion in the climate technology sector through its various funds like Innovation Growth Fund and Growth Ladder Fund. Among those funds stands the Climate Technology Fund, which Industrial Bank of Korea and five major commercial banks are to commit a total of KRW1.05 trillion into its master fund by 2023, and invest KRW3 trillion in climate technology companies through private capital matching. The master fund is managed by Korea Growth Finance. Chairman Kim stated, Climate technology is both a means to achieve carbon neutrality and a future source of sustenance."He added, "The government and private sector together have come up with the plan for investing a total of KRW9 trillion in the climate technology sector by sector by 2030, including the Climate Technology Fund." Chairman Kim also emphasized that the Climate Technology Fund will be mandated to put a certain ratio of its investments into SMEs and venture companies possessing climate technology to ensure that funds are appropriately allocated. He also urged the Climate Technology Fund to actively seek out investment opportunities and serve as patient capital to support the growth of the climate technology sector, which faces significant uncertainties and challenges in achieving short-term results. The Climate Technology Fund plans to establish the master fund during the first half of the year, select the managers for the feeder funds, and complete the formation of these funds by early next year to commence investment. *
