Financial stability is a prerequisite to innovation and inclusive finance policies. FSC maintains close market monitoring for any signs of market volatility and works to ensure stability in the financial markets. There are risk factors originating from abroad and from within. FSC focuses on making our economy more resilient from external shocks, such as a disruption in the global supply chain, and supporting Korea’s material, component and equipment industries to help boost their global competitiveness. Internally, FSC is closely monitoring the trends in household debt and seeking reforms to corporate restructuring in order to prevent domestic risk factors from turning into systemic risks. Policies aimed at increasing financial stability also include enhancing fairness in the financial markets by introducing a comprehensive legal framework for the supervision of financial conglomerates, improving market discipline and promoting transparency in corporate disclosure and accounting practices.
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Sep 26, 2024
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Sep 25, 2024
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Sep 09, 2024
- Regulatory Improvements Proposed for Payment Gateway Services in Wake of Recent E-commerce Payment Failures
- The Financial Services Commission announced a set of measures intended to improve regulations on electronic payment settlement agency services (payment gateway or PG services) on September 9. The proposed measures are aimed at preventing the recurrence of payment delays involving PG services recently seen in the large-scale e-commerce payment failures. The measures have been prepared after coordinating with related government ministries and collecting opinions from experts. First, there will a measure to safely protect the total amount of unsettled payments from PG services. To ensure stability in the payment and settlement system, PG services will be required to separately manage the total amount (100 percent) of unsettled funds in the form of deposit, trust, or payment guarantee insurance, and inform this to sellers when entering into an agreement and disclose this information on their website. However, considering the burden of regulatory compliance, there will be a grace period and the separate management requirement will be phased in graduallyfor instance, 60 percent of unsettled funds during the first year of implementation, 80 percent for the second year, and 100 percent for the third year. In addition, unsettled funds being separately managed shall not be allowed for a transfer or to be used as a collateral, or put up for confiscation or setoff by a third party. Moreover, a priority right to payments will be introduced to ensure safe protection of unsettled funds even when PG services become bankrupt. Second, there will be practical management and supervisory mechanisms designed to encourage sound operation of PG services. Since there currently exist no legal means to enforce PG services to comply with operational guidelines even when there is noncompliance, regulatory tools (corrective order, business suspension, and revocation of registration) will be introduced to enable financial authorities to take actions against noncompliance when there is a failure t
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Sep 03, 2024
- Revised Rules on Electronic Financial Transactions to Take Effect from September 15
- The Financial Services Commission announced that the government approved a revision bill for the Enforcement Decree of the Electronic Financial Transactions Act at the cabinet meeting held on September 3. Together with the previously amended Act on Electronic Financial Transactions (approved on September 14, 2023), the revised rules will help to close the regulatory loophole on electronic prepayment means and strengthen protection for advance payments made for electronic prepayment means. The revised rules on electronic financial transactions are scheduled to take effect from September 15. First, under the revised rules, prepayment service providers are required to separately manage the total amount (100 percent or more) of advance payments made by their customers, thereby strengthening protection for users. In addition, to prevent prepayment service providers from issuing advance payments at discounted rates in excessive levels, the revised rules will only allow them to issue advance payments at discounted rates or offer rewards points only when their debt ratio is 200 percent or below. In this case, the total amount of advance payments required to be separately managed by prepayment service providers includes the amount of monetary benefits offered to customers (discounts and rewards). Advance payments managed separately in the form of a trust or a payment guarantee insurance need to be managed only through investment in safe assets, such as Korea Treasury bonds and local government bonds, or through deposits at banks and Korea Post. The revised rules also make sure that customers are able to get refunds even when their prepayment service providers go bankrupt. In this case, the prepayment service provider will provide relevant information about refunds to the entity in charge of managing advance payments to facilitate the reimbursement of funds to customers. Second, under the revised rules, the scope of prepayment service providers that are subject to the user pr
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Aug 13, 2024
- FSC Introduces Roadmap to Make Improvements to Network Separation in Financial Industry
- The Financial Services Commission held a meeting with private sector experts, financial industry groups, and officials from the Financial Supervisory Service (FSS) and Financial Security Institute (FSI) and introduced a roadmap to bring about improvements to network separation in the financial industry on August 13. After having a series of meetings with financial companies and operating a taskforce to gather opinions from cybersecurity experts, related industries, and organizations, the FSC has prepared a set of measures to improve upon the current regulatory system on network separation and ways to upgrade rules on financial data security. Background The current requirement of network separation has been pointed out as a source of inefficiency and an obstacle for research and development projects for financial companies in their use of new technologies. In particular, with the rapid transition of software into a cloud-based software as a service (SaaS) and the growing importance of generative artificial intelligence (AI), network separation may not only present a source of inconvenience but also stand in the way of boosting competitiveness of the financial industry. Therefore, after ten years of introducing the rule on network separation, the FSC plans to seek a paradigm shift for finding an appropriate balance between innovation and security by upgrading outmoded regulations and overhauling rules and regulations on financial data security over a medium- to long-term. Resolving Regulatory Hurdles through Regulatory Sandbox Program Considering that the current regulatory system on financial data security has been built on an intranet network environment, authorities will seek to ease relevant regulations gradually and in stages. While seeking to promptly resolve regulatory hurdles through the regulatory sandbox program, authorities will prepare sufficient levels of safety mechanisms to ensure cyber and information security until a self-regulating and autonomous dat
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Aug 08, 2024
- FSC Vice Chairman Speaks on Strengthening Sanctions against Unfair Trading Activities in Capital Market
- The Financial Services Commission announced that a policy seminar on ways to strengthen sanctions against unfair trading activities in capital market was held by the Korea Exchange (KRX) and Korea Capital Market Institute (KCMI) on August 8. Vice Chairman Kim Soyoung of the Financial Services Commission attended the seminar and delivered congratulatory remarks. In his speech, Vice Chairman Kim outlined the governments past efforts and progress so far and plans to introduce more diverse sanctions mechanisms targeted at unfair trading activities. The following is a summary of Vice Chairman Kims remarks. In order to more effectively detect and strictly punish unfair trading activities, the government has worked to improve the capital market investigation regimes and bolster sanctions, while boosting incentives for reporting. In this regard, first, a well-coordinated investigation network has been established among related agencies, enabling frequent inter-agency sharing of information about ongoing investigations. Second, against the three major types of unfair trading activities, which include the use of material nonpublic information, price manipulation, and dishonest transactions, imposing penalty surcharges has now become available as a sanctions mechanism. Third, incentives for whistleblowers has been increased to encourage wrongdoers and wrongdoing to be reported. However, the existing sanctions mechanisms have limits in effectively dealing with the ever evolving and complex patterns of unfair trading activities. The current sanctions mechanisms, which focus on criminal punishment and monetary penalty, often take long times to arrive at a final court sentence and are rather ineffective at preventing recidivism. Major overseas economies, such as the U.S. and Hong Kong, have adopted non-monetary sanctions mechanisms to combat unfair trading activities. After closely studying these cases from overseas, the government is seeking to introduce more diverse sanctions me
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Aug 06, 2024
- Financial Support Programs Available for Enterprises Affected by E-commerce Payment Delays
- The Financial Services Commission announced that the previously announced KRW560 billion-plus financial support programs intended to help the sellers affected by recent payment delays at e-commerce platforms will begin to be provided from August 7. As of the end of July, the volume of missed payments by e-commerce platforms (TMON and WeMakePrice) stood at about KRW274.5 billion. As the size of delayed payments is expected to grow in the future, authorities will also consider expanding the size of assistance if it becomes necessary. First, from August 7, sellers that have been hit by payment delays can apply for maturity extension and payment deferment on existing business loans and guarantees for up to one year. In addition, from August 7, the support for maturity extension and payment deferment will also be made available for accounts receivable loans offered by three banks (Shinhan, KB Kookmin, and SC Banks). Second, the Industrial Bank of Korea (IBK) and Korea Credit Guarantee Fund (KODIT) will make available guaranteed loans worth KRW300 billion-plus. Individual businesses are eligible to apply for up to KRW3 billion. The application review process will be streamlined for those seeking to get up to KRW300 million. KODIT will begin to accept application for guarantees from August 9. The Ministry of SMEs and Startups will also make available financing support worth about KRW200 billion at low interest rates through Korea SMEs and Startups Agency (KOSME) and Small Enterprise and Market Service (SEMAS). Third, the government, related organizations, and industry groups will continue to operate an emergency response team to make sure that the financial support programs are effectively operated and proper consulting can be provided to those needed. * Please refer to the attached PDF for details.
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Aug 05, 2024
- FSC Chairman Holds Meeting and Emphasizes Importance of Comprehensive Efforts to Manage Debt Risks
- Chairman Kim Byoung Hwan of the Financial Services Commission held a meeting with macroeconomic and financial market experts on August 5 to review financial risks in four specific sectors, which include debt risks in the household, real estate project finance, and small business sectors, and the soundness of the nonbanking sector, and discussed ways to effectively manage these risks. The following is a summary of Chairman Kims remarks at the meeting. A Summary of Chairmans Remarks Current economic conditions at home and abroad appear to be reaching an inflection point, shown by recent monetary policy decisions in major economies, economic forecasts in the U.S., and domestic housing market situation. Against this backdrop, it is necessary to strengthen our efforts to examine and respond to market risks. While focusing our efforts to promptly and closely manage debt risks in four specific areas, which have been accumulated from the past, it is also essential to take steps to preemptively manage newly emerging risk factors. As there exist concerns about the weakening of the U.S. economy, major stock markets around the world have tumbled recently.Therefore, it is also necessary to maintain close monitoring over volatility in stock markets. The government is focused on working to bolster our stock markets resilience and establish a more credible and reliable market environment for investors by seeking structural improvements over a medium- to long-term. To this end, the government will continue to make efforts to ensure seamless implementation of the Corporate Value-up Program and short sale reform measures. Along the same lines, the government will continue to work on tax support measures that can help to boost investments in the domestic stock market. The relatively high levels of debt-to-GDP ratioand reliance on debt make domestic financial system vulnerable to external shocks. In order to ensure sustainable growth and make our economy more resilient and to guarantee
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Jul 29, 2024
- Authorities Announce Financial Support Measures for Enterprises Affected by E-commerce Payment Delays
- The Financial Services Commission held a meeting with the Ministry of SMEs and Startups (MSS), related organizations, and financial industry associations on July 29 to seek close cooperation from the financial industry to help minimize the damage caused by recent payment delays from e-commerce platforms (TMON and WeMakePrice). First, the FSC and the MSS requested that maturity extension and payment deferment on existing loans to be made available to the vendors affected by payment delays. In this regard, all financial sectors and policy financial institutions agreed to provide up to one year of maturity extension and payment deferment on their existing loans. Maturity extension will also be provided to vendors on existing e-commerce seller loans to ensure that they face no risk of credit downgrading. Second, the FSC plans to make available emergency funds worth KRW300 billion-plus in the form of guaranteed loans offered by Korea Credit Guarantee Fund and Industrial Bank of Korea (IBK) to facilitate low interest financing of SMEs temporarily having liquidity problems due to payment delays. Specific details of the guaranteed loan support program will be determined for announcement in coming days. Third, the MSS plans to provide policy financing support worth about KRW200 billion to assist small merchants and SMEs affected by payment delays. Fourth, the Ministry of culture, Sports and Tourism will operate an interest rate support program (2.5 to 3.0%p) in the amount of about KRW60 billion to help tourism businesses. The government, related organizations, and industry groups will operate an emergency response team to make sure that the financial support programs are effectively operated and the affected businesses can get support through proper channels. * Please refer to the attached PDF for details.
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Jul 17, 2024
- The Act on the Protection of Virtual Asset Users to Take Effect from July 19
- The Financial Services Commission announced that the Act on the Protection of Virtual Asset Users, which intends to establish a sound order in the virtual asset market and ensure protection for users, will take effect from July 19. Background In March 2021, the Act on Reporting and Using Specified Financial Transaction Information was revised to introduce a requirement under which virtual asset service providers (VASPs) were mandated to register with the financial authority. In addition, various types of regulatory mechanisms, such as travel rule, that are aimed at preventing money laundering were established. However, it was continuously pointed out that the regulatory framework centered on anti-money laundering was not adequate for authorities to actively respond to various types of unfair trading activities, such as price manipulation, and for guaranteeing safe protection of users assets. Considering the importance and urgency of providing safe protection for users, the Virtual Asset User Protection Act was enacted on July 18, 2023, reflecting key provisions proposed under 19 legislative bills that were pending at the National Assembly. For about one year since then, subordinate regulations have been drawn up, and VASPs were given the time needed to prepare for the implementation of the Virtual Asset User Protection Act from July 19, 2024. Key Provisions of the Virtual Asset User Protection Act This Act contains provisions (a) protecting users deposits and virtual assets, (b) regulating unfair trading activities, such as price manipulation, (c) authorizing the financial regulators to supervise, inspect, and sanction VASPs, and to investigate and take appropriate actions against those engaging in unfair trading activities. First, customers deposits should be safely kept at banks, and VASPs need to pay fees to their customers as interest payments on their deposits. VASPs should keep users virtual assets separate from their own virtual assets, and need to actually h
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Jul 11, 2024
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Jul 10, 2024
- FSC Announces Designation of Seven Non-holding Financial Groups for 2024
- The Financial Services Commission held the 13th regular meeting on July 10 and designated seven non-holding financial groups for 2024 pursuant to the Act on the Supervision of Financial Conglomerates (the Act hereinafter). The designated entities are Samsung, Hanwha, Mirae Asset, Kyobo, Hyundai Motor, DB and Daou Kiwoom groups. The designation and supervisory system on non-holding financial groups aims to effectively oversee and manage risk contagion or concentration in financial groups. With the implementation of the Act from June 2021, the FSC has been designating non-holding financial groups every year. The seven selected entities this year satisfied all designation criteria under the Act. The selected entities will be subject to the following rules. a) Select a financial business entity representing the entire group after considering the investment relationship, total size of asset, capital, and so on, and report their selection to the Financial Supervisory Service. b) Periodically inspect and evaluate group-wide risks and prepare and follow their own internal control and risk management policy, and transparently disclose material information needed to ensure consumer protection and report to the authorities. c) Draw up capital adequacy ratio reflecting risk-weighted capital based on the risk assessment conducted by the financial authorities. d) The financial authorities will carry out a periodic assessment (every three years) on the risk and risk management status of non-holding financial groups. It is expect that the designation of non-holding financial groups will help them to more effectively monitor and manage group-wide risks on their own. * Please refer to the attached PDF for details.
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Jul 10, 2024
- FSC Identifies D-SIBs and D-SIFIs for 2025
- The Financial Services Commission identified five bank holding companies (BHCs) and five banks as domestic systemically important banks (D-SIBs) and domestic systemically important financial institutions (D-SIFIs) for 2025 on July 10. Those selected for 2025 are same as the previous years list of selectionShinhan Financial Group, KB Financial Group, Hana Financial Group, Woori Financial Group, NH Financial Group, KB Kookmin Bank, Shinhan Bank, Woori Bank, KEB Hana Bank and NH Bank. Those identified as D-SIBs are required to set aside an additional common equity capital of 1.0 percent. The FSC identifies D-SIBs every year in accordance with assessment criteria recommended by the Basel Committee on Banking Supervision (BCBS). Meanwhile, the FSC also identifies D-SIBs as domestic systemically important financial institutions (D-SIFIs) under the amended Act on the Structural Improvement of the Financial Industry. D-SIFIs are required to prepare and submit their own recovery plans to the Financial Supervisory Service (FSS) within three months from the day of being designated as a D-SIFI. Since the D-SIBs selected for 2025 are the same as the previous year, there will be no actual increase in capital ratio required from them. * Please refer to the attached PDF for details.
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Jul 09, 2024
- Insider Transactions of Listed Companies Subject to the Prior Disclosure Requirement from July 24
- The Financial Services Commission announced that regulatory changes, which require insider transactions of listed companies to be disclosed 30 days prior to their planned transaction dates, have been approved by the government at a cabinet meeting held on July 9. The revision proposal for the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and its subordinate regulations will go into effect from July 24. The rule changes being introduced specify (a) the entities that will be exempted from the prior disclosure duty, (b) the volume and type of transactions exempted from the disclosure duty, (c) details regarding the procedure and method of disclosure, (d) specific reasons or cases where insider transactions plan can be withdrawn, and (e) a clearer method for calculating penalty surcharges that can be imposed on rule-breakers. First, the rule changes being introduced 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 prior 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 introduced 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 th
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Jun 27, 2024
- PF Lending Institutions' Consortium Agreement Revised to Seek Soft-landing in Real Estate PF Market
- The Financial Services Commission announced that the project finance lending institutions consortium agreement for all financial sectorsincluding eleven industry associations and national federations and seven related organizationshas been revised as part of the broader plan to seek an orderly soft-landing in the real estate project finance market on June 27. In order to more effectively control lenders from granting maturity extension and deferment of interest payments to the development projects that fail to meet the viability test in a repeated and indiscriminate manner, the project finance lending institutions consortium agreement is being updated to strengthen requirements on the provision of maturity extension and deferment of interest payment. First, when extending maturity for the second time or more, a viability assessment performed by a third-party expert (accounting firm, credit rating agency, etc.) and consent from three-fourths (two-thirds previously) of the lending institutions will be required. When seeking for maturity extension after having a viability assessment performed, there will be an ample period granted to ensure sufficient time for the viability assessment and developers business plan. Second, deferment of interest payments will be allowed only when late interest payments have been repaid in principle. However, when 50 percent or more of late interest payments have been repaid and a schedule for making further payments on the remaining balance is being presented, lenders will consider these factors when making decisions on whether to grant deferment of interest payments. Third, when maturity extension and deferment of interest payments take place, details including their deliberation documents should be submitted to the secretariat of the project finance lending institutions consortium without any delay to ensure effective monitoring of the situation concerning the restructuring or liquidation of unviable projects. The revised consortium ag
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Jun 25, 2024
- New Enforcement Decree on the Protection of Virtual Asset Users Approved by the Government
- The Financial Services Commission announced that the government approved a new legislative bill on the Enforcement Decree of the Act on the Protection of Virtual Asset Users at a cabinet meeting held on June 25. The Enforcement Decree will go into effect on the same day as the Act on the Protection of Virtual Asset Users (the Act hereinafter) on July 19. The Act was enacted on July 18, 2023 with aims to protect virtual asset users and establish a sound order in the virtual asset market. The Act provides definitions on virtual assets and those that are excluded from the scope of virtual assets. The Act mandates virtual asset service providers (VASPs) to safely keep and manage users deposits and virtual assets. The Act also establishes legal grounds to impose penalties and sanctions on unfair trading activities, such as the use of material nonpublic information and price manipulation. In this regard, the Enforcement Decree to the Act approved by the Government today prescribes specific procedures and methods delegated by the Act as follows. Key Details Definition and Formation of an Advisory Committee (Articles 2 to 7) Virtual assets are defined as electronic tokens with economic value, which can be traded or transferred electronically. Electronic tokens that are regulated by another legislation or are deemed to pose no harm to users, such as game money, electronic money, electronic stocks, and central bank digital currency (CBDC) are excluded from the scope of virtual assets. Electronic bonds, mobile gift certificates, deposit tokens linked to the CBDC network, and non-fungible tokens (NFTs) are also added to the listed of excluded tokens. The FSC will organize an advisory committee on virtual assets to seek consultation on related policies and regulations. The committee will be made up of representatives of relevant government ministries and experts from the private sector, and will be chaired by Vice Chair of the FSC. Management of User Deposits (Articles 8 to 10)
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Jun 25, 2024
- FSC Announces Plans for Implementing Stressed Debt Service Ratio Rules in H2 2024
- The Financial Services Commission announced its plan to implement the second phase of stressed debt service ratio (DSR) rules from September 1, 2024, a postponement of two months from the initial plan. Considering that government-wide support measures intended to alleviate the challenges and difficulties of lower income households and self-employed business owners are currently being drawn up and the fact that the viability assessment for the real estate development sites under project finance loans will start from the end of June, the decision to postpone the application of the second phase stressed DSR rules is aimed at facilitating a soft-landing of the stressed DSR regulation in the market. The stressed DSR regulation imposes a certain level of additional stress rate when calculating a borrowers DSR as it takes into account the possibility of the borrower facing heavier repayment burdens in the future with increases in interest rates. Key details of the second phase stressed DSR rules, effective from September 1, 2024, are as follows. First, the additional stress rate of 0.75 percent will be applied, which will be at a 50 percent level of the base stress rate (1.5 percent), an increase from the current level of 25 percent. Second, credit loans from the banking sector and home-backed mortgage loans from the nonbanking sector will be subject to the stressed DSR limits. However, for credit loans, calculation of DSR with the additional stress rate will only take place for borrowers when the balance of credit loans exceeds KRW100 million. Third, when applying individual DSR limits, the maximum loan limits are expected to decrease by about 3 to 9 percent for mortgage loans from banks and nonbanks, depending the type of interest structures (variable, mixed, or periodically changing), and by 1 to 2 percent for credit loans from banks, depending on the type of interest structure and maturity. However, considering that the proportion of borrowers whose maximum loan limits
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Jun 24, 2024
- Reporting Requirement to be Strengthened for Virtual Asset Service Providers
- The Korea Financial Intelligence Unit (KoFIU) announced that a revision of the subordinate regulation under the Act on Reporting and Using Specified Financial Transaction Information will take effect from June 27, 2024. The revised regulation will strengthen the reporting requirements for virtual asset service providers (VASPs). First, the revised regulation provides a regulatory ground requiring VASPs to report details of their own compliance systems and the status of major shareholders. In this regard, VASPs will be required to report their compliance system, which should include information about the organizational, personnel, computer facilities, and internal control mechanisms intended to ensure compliance with relevant laws. In addition, VASPs will be newly required to report the status of their major shareholders, which will allow the authorities to have a clear understanding about their shareholder status. Second, under the revised regulation, different reporting periods will be applied for reporting changes in business status, depending on the particular nature of the change being reported. Any change in major shareholders or business location should be reported within 14 days. Any change in the status of certification for their information security management system (ISMS) should be reported within 30 days. Any change concerning the status of executives, nature of service operation, and information about the real-name verified checking account should be reported 30 days prior to the expected change taking place. Third, under the revised regulation, financial companies issuing real-name verified checking accounts to VASPs will be required to specify their own procedures and methods for assessing risks in their operations manual. This will help to ensure that financial companies are able to more effectively evaluate risks concerning money laundering when issuing real-name verified checking accounts to VASPs. In addition, the revised regulation will newly req
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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