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Mar 11, 2024
- Application for Interest Refunds from Nonbank Lenders to be Available for Small Merchants from March 18
- The Financial Services Commission (FSC) and the Ministry of SMEs and Startups (MSS) announced that small merchants who borrowed from nonbank financial institutions with interest rates ranging from 5 percent to 7 percent as of December 31, 2023 will be able to apply for interest refunds from their lenders starting from March 18. From March 13, the nonbank financial institutions, such as savings banks, mutual finance businesses, and specialized credit finance businesses, will start notifying their customers about the availability of this interest refund support program through their website or via mobile text message. Borrowers who are eligible to receive interest refunds will be able to apply starting from March 18. Interest refunds will begin to be paid out starting from March 29. For a borrower to be eligible to receive interest refunds, he or she should have made interest payments for at least a full-year. Once the lender verifies the receipt of a full-year interest payments, the borrower will receive interest refunds within six business days from the last business day of the first quarter that falls after the borrower made full-year interest payments. For those holding multiple loan accounts, interest payments should have been made for a full-year on all of their loan accounts to be eligible for the payback in interest refunds. Thus, borrowers are advised to check whether they have made interest payments for a full-year before applying. The refund rate on loans will vary depending on actual borrowing rates adopted as of the last day of December 2023. For loans with interest rates ranging from 5.0 percent to 5.5 percent, a refund rate of 0.5 percent will be applied. For loans with interest rates ranging from 5.5 percent to 6.5 percent, the refund rate will be determined as a difference between the actual interest rate adopted and 5 percent. For loans with interest rates ranging from 6.5 percent to 7 percent, a refund rate of 1.5 percent will be applied. The maximu
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Mar 06, 2024
- Authorities Hold Meeting on Policy Finance to Discuss Operation of KRW5 Trillion Fund for MMEs
- The Financial Services Commission held the 6th consultative body meeting on policy finance with related government ministries and policy financial institutions on March 6. FSC Vice Chairman Kim Soyoung presided over the meeting and delivered opening remarks where he emphasized the need for policy financial institutions to frontload the implementation of policy funds as much as possible in the first half of this year in line with the planned frontloading of fiscal spending by the government amid ongoing challenges in the economy. At todays meeting, officials discussed the launching of a fund specifically designed to support middle market enterprises (MMEs). The MME investment fund will be created in the size of about KRW5 trillion with contribution from the banking sector, and it is expected to provide a significant boost to MMEs in their attempt to venture into new industries or expand their operations. Second, officials discussed this years plan for operating the innovative growth fund, which has been set up for operation since last year with aims to boost future growth engines and cultivate innovative venture businesses. For 2023-2027, the innovative growth fund aims to supply KRW15 trillion worth of policy funding support. Last year, despite challenges resulting from high interest rates, the total volume of funds raised at the end of the year surpassed the initial target of KRW3 trillion. For this year, officials decided to raise additional KRW3 trillion for the operation of the innovative growth fund, which will help to facilitate investment in climate related and artificial intelligence technologies. Third, officials discussed ways to refine impact analysis to better examine the effectiveness of policy finance support provided to enterprises through a close input-output analysis performed by Korea Credit Information Services and Korea Institute of Finance. The result of their analysis will be utilized to improve efficiency in the allocation of policy funds supp
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Mar 04, 2024
- Rule Changes Proposed for Upgrading Regulation on Corporate Mergers and Acquisitions
- The Financial Services Commission issued a preliminary notice of rule changes being proposed for improving regulations on corporate mergers and acquisitions under the Financial Investment Services and Capital Markets Act (FSCMA). The revisions being proposed for the enforcement decree of the FSCMA and its subordinate regulation on the issuance and disclosure of securities contain measures to strengthen disclosure duties, improve the process of external evaluation, and upgrade the method for calculating merger prices. First, with regard to enhancing disclosure duties, the revision proposal mandates listed companies to disclose written statements about their board of directors meetings with details regarding what has been discussed and decided on MA related issues. This will ensure that general shareholders can have access to information regarding corporate MA activities. The board of directors written statement should contain information about the purpose of merger, its anticipated effect, merger price and ratio, as well as any dissenting opinion. The board of directors written statement about MAs should be disclosed as an attachment to the securities registration and material disclosure for that particular year. This will help to ensure more responsibility from boards of directors and increased fairness and transparency in the process of MAs. Second, regarding rules on the external evaluation process, the revision proposal establishes a code of conduct for external evaluation agencies to bolster fairness and credibility. In this regard, external evaluation agencies will be required to maintain their own quality management standards, or otherwise be barred from serving as an external evaluator. Their quality management standards should address issues relating to the maintenance of autonomy, objectivity, and fairness, conflicts of interest, confidentiality, and actions to be taken for misconduct. An external evaluation agency offering third-party evaluation service to
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Feb 28, 2024
- Rule Changes Proposed Regarding Insider Transactions under the FSCMA
- The Financial Services Commission issued a preliminary notice of rule changes being proposed concerning the ex-ante disclosure requirement for insider transactions under the Financial Investment Services and Capital Markets Act (FSCMA). With regard to the ex-ante disclosure requirement for insider transactions, the revision proposal specifies the entities that will be exempted from the disclosure duty, the volume and type of transactions that will be exempted from the disclosure duty, and the procedure and method for disclosure. First, the rule changes being proposed exempt pension funds and other financial investors that are expected to have higher levels of internal control standards and are unlikely to misuse material nonpublic informationsuch as collective investment vehicles, banks, insurance companies, specialized credit finance companies, financial investment businesses, venture capital firms, and the Korea SMEs and Startups Agencyfrom the duty to disclose their stock transaction plans in advance for insider transactions. Moreover, an exemption from the ex-ante disclosure duty will also be granted to foreign investors that are deemed to have an equivalent status to the above mentioned domestic financial investors to ensure more equal treatment of both domestic and foreign investors. Second, the rule changes being proposed grant an exemption if the volume of transactions in particular securities typesover the past six months is less than one percent of the total number of shares issued by the company within that particular year and if the total amount of transactions is less than KRW5 billion. Moreover, an exemption from the ex-ante disclosure duty will also be granted for transactions resulting from a statutory requirement, tender offers, or acquisitions or dispositions following corporate spin-offs or mergers. Third, the rule changes being proposed require that companies insider transaction plans specify the expected transaction price and volume as well as t
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Feb 27, 2024
- FSC Vice Chairman Holds Investor Relations in Singapore and Introduces the Corporate Value-up Program
- Vice Chairman Kim Soyoung of the Financial Services Commission held an investor relations event in Singapore with major institutional investors from Asia participating on February 27. During the dialogue, Vice Chairman Kim outlined the governments capital market reform initiatives with a particular attention on the recently announced Corporate Value-up Program, which have gained much interest from both domestic and overseas investors. The following is a summary of Vice Chairman Kims remarks. The Korean governments capital market reform measures have been focused on the following three areas. First, to establish a fair and transparent market order, the government has bolstered measures against unfair trading activities. A temporary ban on short-selling has been put in place to make trading conditions more equal for both retail and institutional investors and to build a completely electronic short-selling transaction system designed to prevent naked short-selling activities. Second, to make Koreas capital markets more accessible to investors, the authorities have already abolished the foreign investors registration requirement, mandated companies to file disclosures in English in phases, and eased the reporting requirement to facilitate the use of omnibus account. To help expand domestic investor base, the government has already decided to repeal the planned introduction of capital gains tax on financial investments and plans to expand tax benefits for individual savings accounts (ISAs). Third, to promote shareholder values in corporate management practices, the government has been consistently working on various measures aimed at protecting the rights of general shareholders. As a consequence, many large companies have now adopted the improved dividend payout procedure in which investors are able to make investment decisions while knowing how much they will receive in dividends. In addition, the Corporate Value-up Program, which was unveiled on February 26, is design
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Feb 26, 2024
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Feb 26, 2024
- Active Support to be Provided to Promote Voluntary Efforts of Listed Companies in Enhancing Their Value
- The Financial Services Commission held the first seminar on the Corporate Value-up Program for the advancement of the Korean stock market together with the Korea Exchange, other related institutions, and industry groups on February 26. At todays seminar, key details of the Corporate Value-up Program, which have been jointly prepared by related institutions, were introduced to facilitate discussions and collect opinions from various stakeholders. FSC Chairman Kim Joo-hyun delivered opening remarks outlining the governments reform initiatives to bring about fundamental changes in our capital markets. They include (a) establishing a fair and transparent market order, (b) improving accessibility to capital markets, and (c) strengthening protection for general shareholders. To build up a positive feedback loop in our capital markets where listed companies are able to get proper valuation for sound growth and investors are able to share the profit of that growth and reinvest in the Korean capital market, the government needs to support companies voluntary efforts to raise their value, the Chairman said. He added that the Corporate Value-up Program will be implemented continuously as a mid- to long-term project to support companies value enhancement efforts and promote management practices that place a priority on shareholder value. Key details of the Corporate Value-up Program are as follows. In order to actively support listed companies self-driven efforts to improve their corporate value, the government and relevant organizations set out a framework to implement the Corporate Value-up Program. The framework consists of three pillars: (a) supporting listed companies to prepare, implement and communicate their corporate value-up plans, (b) supporting investors in making informed evaluations and investments in companies that demonstrate outstanding improvements or high value, and (c) establishing a dedicated system to support the implementation of the Corporate Value-up Pr
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Feb 26, 2024
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Feb 21, 2024
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Feb 21, 2024
- FSC Announces a Plan to Expand Open Banking Services
- Vice Chairman Kim Soyoung of the Financial Services Commission held a meeting with officials from relevant organizations and industry groups on February 21 to discuss ways to improve infrastructures for financial innovation and announced a plan to expand open banking service. In his opening remarks, Vice Chairman Kim said that the two major infrastructures open banking and MyData systems - introduced to promote digital innovation in the financial sector have made accomplishments in improving convenience for financial consumers and enabling innovative financial services. The open banking service, introduced in December 2019, has become an essential payment infrastructure for enabling various fintech solutions in payment, money transfer, wealth management and cross-border payment, etc. by prompting financial companies to open up their closed payment networks. The API-based MyData service, introduced in January 2022, has also allowed financial consumers to make account inquiry with ease and exercise more control over their own data, paving the way for the availability of innovative financial services including online platforms for switching loans or comparison and recommendation services of insurance products. Building on the achievements, Vice Chairman Kim outlined policy directions for further improvements in open banking and MyData services and announced a plan to expand the open banking service. Under the plan, first, the FSC seeks to expand the scope of data available in open banking from personal accounts to business accounts so that companies can make account inquiry across different banks in real time at once. With business account data available in open banking services, financial companies will be able to use such data including account balances and transaction record to launch new services in fund management for their corporate clients. Second, open banking service, currently available online only, will be provided through offline channels such as bank branc
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Feb 20, 2024
- Authorities Hold Meeting on Household Debt Related Risks
- Vice Chairman Kim Soyoung of the Financial Services Commission presided over a meeting with relevant authorities and organizations on February 20 to discuss current household debt situation, related risks and future expectations. At the meeting, the authorities also went over the situation with policy mortgage loans and held talks on ways to improve the quantitative and qualitative structure of household debt. The preliminary data on household credit released by the Bank of Korea for the year of 2023 showed an increase of KRW18.8 trillion (up 1.0 percent) from the previous year. When compared to the ten-year (2013-2022) average growth of about KRW90 trillion a year in previous years, the current pace of growth appears to be on a very stable footing. At the meeting, participants expressed favorable views on the stable management over household credit. However, with expectations about interest rate cuts this year and a potential recovery in the housing market, authorities shared the same view on the need to more systematically manage the pace of growth. In this regard, Vice Chairman Kim said that the authorities will make efforts to ensure that the pace of household debt growth stays within the level of annual economic growth in 2024. Although there may be challenges along the way, such as rising demand for loans due to expectations for interest rate cuts and excessive competition between lenders, Vice Chairman Kim said that the authorities will work on the following measures. First, the authorities will continue to maintain close communication with all financial sectors. The Financial Supervisory Service will keep close tabs on how lenders are handling loans by their type and use, while requiring self-adjustment measures from the lenders deemed to be extending credit too rapidly. Second, the authorities will strictly manage the supply of policy mortgage loans to ensure the availability of housing loans to non-speculative homebuyers and renters, while taking appropria
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Feb 15, 2024
- Government Unveils KRW76 Trillion Worth Corporate Financing Support Plans in Private-Public Joint Initiative
- Chairman Kim Joo-hyun of the Financial Services Commission presided over a meeting with the heads of five major commercial banks and policy financial institutions on February 15 and announced the governments plans to provide tailored funding support for enterprises. The FSC has held a series of meetings with businesses to listen to their challenges and difficulties in financing business operations. To make sure that the prepared measures can actually serve the needs of businesses, the FSC has actively collaborated with the Ministry of Economy and Finance, the Ministry of Trade, Industry and Energy and the Ministry of SMEs and Startups. The support measures being introduced today are also an outcome of active participation and contribution from policy financial institutions as well as from major commercial banks. In his opening remarks, FSC Chairman Kim Joo-hyun said that the future of Korean economy depends on the competitiveness of our enterprises, and that to boost our industrial competitiveness through new initiatives to ensure a continuous growth amid uncertain business environment, it is essential to have finance play an active role. In this regard, Chairman Kim stressed that it is necessary to have (a) a large-scale investment support for high-tech industries, (b) a targeted investment support for middle market enterprises, and (c) assistance programs made available for businesses undergoing challenging situations due high interest rates and so on. The corporate financing support plans being unveiled today consist of the following three key measures. First, authorities have prepared strategic financing support plans worth KRW26 trillion-plus for high-tech enterprises. A supply chain stabilization fund will be created to help businesses seeking to diversify imports, develop alternative technologies, and secure raw materials from overseas. The Korea Development Bank (KDB) will provide KRW15 trillion in financing support to the five major strategic sectorssuch as
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Feb 14, 2024
- Household Loans, January 2024
- In January 2024, the outstanding balance of household loans across all financial sectors edged up KRW0.8 trillion (preliminary), a growth of KRW0.6 trillion from the previous month (up KRW0.2 trillion). * Change (in trillion KRW, y-o-y): +6.1 (Aug 2023), +2.4 (Sep), +6.2 (Oct), +2.6 (Nov), +0.2 (Dec), +0.8 (Jan 2024p) (By Type) Home mortgage loans increased KRW4.1 trillion, edging up at a slightly slower rate than the previous month (up KRW5.0 trillion). Mortgage loans from banks rose at a somewhat slower rate (from up KRW5.1 trillion a month before to up KRW4.9 trillion in January 2024). Mortgage loans from nonbanks fell at a faster rate (from down KRW0.1 trillion a month before to down KRW0.8 trillion in January 2024). Other types of loans dropped KRW3.3 trillion. (By Sector) Household loans grew at a somewhat faster rate in the banking sector, while falling at a slower rate in the nonbanking sector. Banks saw a rise of KRW3.4 trillion in January 2024, up from KRW3.1 trillion a month ago. Home mortgage loans from banks grew KRW4.9 trillion, a slowdown from KRW5.1 trillion a month before, due mainly to a significant drop in the issuance of new policy mortgage loans. Other types of loans from banks dropped KRW1.5 trillion, declining at a slower rate than the previous month (down KRW2.0 trillion). Household loans from nonbanks fell KRW2.6 trillion, declining at a slower rate compared to the previous month (down KRW2.9 trillion). Mutual finance businesses and insurance companies saw drops of KRW2.5 trillion and KRW0.5 trillion, respectively, while specialized credit finance businesses and savings banks saw increases of KRW0.4 trillion and KRW0.1 trillion, respectively. (Assessment) Since the level of growth in January 2024 is about a quarter of the monthly average in the second half of last year, the pace of household loan growth remains at a stable level. However, as there are possibilities for changes in the future, financial authorities will keep close tabs on hous
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Feb 14, 2024
- Authorities Meet to Discuss ESG Disclosure Standards
- The Financial Services Commission held a meeting with officials from industry groups, investors, related organizations and private sector experts on February 14 to have a discussion on the preparation of domestic disclosure standards for environmental, social and governance (ESG) management. FSC Vice Chairman Kim Soyoung presided over the meeting and delivered opening remarks, outlining trends in global disclosure standards and direction for domestic ESG disclosure standards. The following is a summary of Vice Chairman Kims remarks. Global interest on ESG and sustainable growth has led to the strengthening of ESG policy and regulations in global capital markets. To facilitate domestic firms to more effectively respond to this, the government has been making efforts to support the sustainable growth of our economy and businesses. As a part of this, the FSC had introduced a general direction for pursuing ESG disclosure standards at a taskforce meeting held in October last year. Considering trends in major countries, authorities had agreed to adopt ESG disclosure standards from after 2026 and agreed to consider an exchange filing requirement and an application of a minimum level of sanctions during an early stage. Moreover, authorities had agreed on considering the adoption of climate-related disclosure standards first as there is an international consensus already established on this. ESG disclosure standards are aimed at making sure that information about corporate sustainability practices can be disseminated to investors in a more systematic way, thereby helping to resolve the problem of information asymmetry between companies and investors. Many firms have been filing sustainability reports on a voluntary basis, but the lack of common standards made them difficult for comparison. Therefore, the government has been working with related organizations, such as Korea Accounting Institute, in preparing ESG disclosure standards to be adopted by domestic stock companies.
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Feb 13, 2024
- FSC Proposes Rules Change Introducing Responsibilities Map to Bolster Internal Control of Financial Companies
- The Financial Services Commission issued a preliminary notice regarding a revision proposal for the enforcement decree of the Act on Corporate Governance of Financial Companies and its supervisory regulation on February 13. In December last year, a partial revision to the Act on Corporate Governance of Financial Companies (the Act hereinafter) was passed by the National Assembly, paving the way for financial companies to adopt responsibilities maps and have their executive officers manage internal control duties in their lines of work. As a follow-up to this, the revised enforcement decree and supervisory regulation being announced today specifically deal with the issues delegated by the Act, such as how to prepare for a responsibilities map and when and how to submit it, as well as details about the internal control oversight duty of chief executive officers. First, the revision proposal deals with specific details concerning how to write and submit responsibilities maps. A responsibilities map should be written with details about the scope of internal control responsibilities of each executive officer demonstrating a well-balanced division of responsibilities. Financial companies will be required to submit responsibilities statements, detailing each executive officers duties and responsibilities, as well as responsibilities diagrams, mapping out responsibilities of their executive officers in relation to one another in a visual manner. The responsibilities maps should be submitted to the financial authority within seven business days from the time of approval from their boards. The term responsibilities refers to the internal control and risk management duties relating to the business operations of a financial company. The business operations of a financial company are categorized into (a) the company-wide oversight functions, such as internal audit, compliance, and risk management, (b) the authorized sales and marketing related functions, such as lending and depo
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Feb 08, 2024
- FSC to Ensure Thorough Preparation for the Enforcement of the Act on the Protection of Virtual Asset Users
- The Financial Services Commission announced that the Act on the Protection of Virtual Asset Users (the Act hereinafter) will take effect from July 19, 2024. This law was enacted on July 18, 2023 with aims to protect the users of virtual assets and maintain an order in the market. The Act largely deals with (a) protection of assets held by users of virtual assets, (b) prohibition of unfair trading activities in the virtual asset market, and (c) supervision and sanctions authority over virtual asset service providers (VASPs) and related market activities. To provide specific details delegated by the Act, the FSC had prepared an enforcement decree and a supervisory regulation and sought public comment between December 11, 2023 and January 22, 2024. Major details of the current legislative framework on the protection of virtual asset users are as follows. First, VASPs have the duty to safely keep deposits and virtual assets owned by users. Banks have been selected as the sole financial institutions eligible to carry out the handling and custody of user deposits. To ensure safe protection of users assets, VASPs need to keep more than a certain level of users assets in cold wallets (minimum 80 percent of virtual assets economic value). To be prepared for incidents of hacking or computer failure, VASPs need to have a liability insurance or set aside a reserve to be able to meet demands for compensation. In transactions involving virtual assets, the acts of using undisclosed material information, manipulating market prices, and engaging in unfair trading activities are all prohibited and punishable by either a criminal penalty or a penalty surcharge. A criminal sentence of minimum one year of imprisonment or a fine of more than three times and up to five times the amount of unfairly gained profits can be imposed. Violators may face up to a life sentence depending on the amount of unfairly gained profits (if more than KRW5 billion). Imposing a penalty surcharge at double the
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Feb 07, 2024
- Financial Development Review Committee Meets to Discuss Financial Policy Agenda for 2024
- The Financial Services Commission held this years first financial development review committee meeting on February 7. At todays meeting, seven new members were appointed to the committee, and the authorities discussed key financial policy plans for 2024. Under the vision of a caring and reliable finance, standing by the people, the FSC presented three key policy objectives for this year(a) a credible finance, safeguarding peoples livelihood, (b) a robust finance, capable of withstanding risks, and (c) a dynamic finance, propelling growth into the future. The FSC plans to carry out detailed policy initiatives in nine specific areas to achieve these goals. At the beginning of the meeting, FSC Chairman Kim Joo-hyun said that while successfully dealing with various issues to ensure stability in financial markets, this year, the FSC will particularly focus on boosting the value of our capital markets by introducing a corporate value-up program and making efforts to ensure maintenance of strict market discipline. At the same time, Chairman Kim also pointed out that it is important to seek measures to actively prepare for impending changes in the future. As many experts have suggested, shifting demographic structures, climate change and advancement in technologies are expected to have far-reaching impacts on financial markets. In this regard, Chairman Kim stressed that how we respond in taking up these new challenges will shape the future of our economy. To effectively deal with these challenges, Chairman Kim said that authorities will set up and operate taskforces on demographic, climate and technology issues to more accurately analyze and prepare response strategies. * Please refer to the attached PDF for details.
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Feb 06, 2024
- FSC Holds Meeting and Announces Plans to Upgrade Rules on Corporate Mergers and Acquisitions
- Vice Chairman Kim Soyoung of the Financial Services Commission presided over a meeting with officials from related organizations and industry groups on February 6 and announced plans to improve rules on corporate mergers and acquisitions (MAs). The measures are aimed at strengthening protection for investors, which will also help to boost regulatory consistency with global standards. At the meeting, Vice Chairman Kim delivered opening remarks, outlining some of the problems observed in the market and policy proposals to address them. The following is a summary of Vice Chairman Kims remarks. Corporate MAs are important mechanisms to promote growth and innovation in a company and boost dynamism in an economy. Securing a competitive edge through MAs has become ever more important when considering recent economic conditions, such as interest rate hikes and global economic slowdown. Meanwhile, MAs are important corporate decisions which can significantly influence the governance structure and share value of a company, and thus are also very important from the perspective of guaranteeing the protection of rights for general shareholders. For this, authorities have worked to ensure that companies get consent from their shareholders when pursuing MAs and to provide sufficient protections for dissenting shareholders. However, in corporate MAs, there continues to be the problem of general shareholders being sidelined, with their voices not being heard enough. In this regard, there have been concerns about the lack of sufficient information available on the reasons for undertaking MAs and their processes as well as important decision-making by boards of directors. At the same time, there have been also complaints about the rigidity in rules concerning the method of calculating merger prices, which have not been able to take into account the corporate restructuring demands of companies in a more autonomous way. To address these issues, in May last year, the FSC announced a set
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Feb 05, 2024
- FSC and MOIS Sign MOU to Bolster Prudential Supervision on MG Community Credit Cooperatives
- The Financial Services Commission announced that it has signed a memorandum of understanding (MOU) with the Ministry of the Interior and Safety (MOIS) to strengthen cooperation between the two organizations to bolster supervision over MG Community Credit Cooperatives (MGCCC) on February 5. In the wake of large-scale deposit outflows that took place at MGCCC last year, the FSC and the MOIS came to agree on the need to expand the role of financial authorities in carrying out prudential supervision over MGCCC. Shortly thereafter, in December last year, the Financial Supervisory Service (FSS) and the Korea Deposit Insurance Corporation (KDIC) each set up an internal organization tasked with supervising MGCCC. In this regard, todays agreement lays out rules and principles needed to build a stronger cooperative supervisory network between the two organizations. Key details of the agreement are as follows. First, regarding the rules and procedures, the MOIS will decide on MGCCCs prudential management standard in consultation with the FSC and on a par with the prudential standards observed by other types of mutual financial businesses. Second, regarding information sharing, the FSC will be able to regularly and frequently receive information needed to ensure prudential supervision over MGCCC from the MOIS. Third, regarding inspection and post-inspection measure, the MOIS and the FSC will mutually consult with each other in establishing a plan for inspection and deciding on a post-inspection measure. At the MOU signing event, FSC Chairman Kim Joo-hyun pledged to actively cooperate with the MOIS and urged related authorities to make sure a seamless operation of the joint inspection units. The government expects that this agreement will serve as a first step in helping to bolster prudential supervision on MGCCC. * Please refer to the attached PDF for details.
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Feb 01, 2024
- FSC Proposes Revision to Supervisory Regulation on Electronic Financial Services
- The Financial Services Commission proposed a revision to the supervisory regulation on electronic financial services on February 1. The revision is intended to shift the current regulatory framework from rule-based to principle-based one, allowing more room to make autonomous decisions for financial companies, and bolster the resilience of electronic financial system to disasters and cyberthreats. It has been pointed out that the current framework of the supervisory regulation on electronic financial services, which remained little changed since it was established in 2006, makes it difficult to flexibly respond to evolving security threats and encourage passive responses from financial companies. In particular, there has been a growing need for making financial industrys cybersecurity system more adaptable and resilient in response to technology advances (e.g. artificial intelligence or cloud computing) and evolving cyberthreats. Against this backdrop, the revision proposal is focused on allowing more room for financial companies to make decisions on their own on financial security matters and encouraging them to make more investment in cyber security by making financial security regulations more goal-and-principle oriented. First, the revision proposal reduces the number of rules to 166 from 293 previously to ensure that financial businesses can flexibly respond to new risks. Instead of prescriptive and exhaustive rules, the revised regulations will only present principles and goals and allow financial companies to make decisions on details on their own. For example, the revision proposal abolishes provisions specifying the method of creating users passwords and allows financial companies to adopt their own method of creating passwords and managing authentication system. Second, to bolster cyber resilience against disasters and electronic incidents, the revision proposal introduces requirements for certain types of small- and medium-sized financial companies and el
