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The historic Brexit referendum was approved by voters on June 23, 2016. This unexpected result drove world leading financial companies in London to worry that Brexit would cost London its hub status and to announce that they will look for cities that could replace London for their operations.
While Paris, Frankfurt and Dublin have all been thought to be contenders, each of them has touted itself as the most appropriate alternative for London. These cities recognize that being Europe's financial hub can earn them an enormous profit and additional benefits, so it can be said that war without gunfire has already started among them.
Korea came to take part in a global competition earlier in 2003 by creating a "Northeast Asia Financial Hub Road Map" and promoting policies for establishing itself as a financial hub. After that, "the Creation and Development of Financial Hubs Act" was enacted in late 2007, and the Financial Hub Korea (Fn Hub Korea) was set up at the Financial Supervisory Service (FSS) in September 2008.
On the frontline of global competition, the Fn Hub Korea promotes the entry of foreign financial companies and business operations into Korea. Furthermore, the Fn Hub Korea exerts every effort to address difficulties and complaints of foreign financial firms and also provides living assistance, such as an immigration service. In addition, the Fn Hub Korea particularly focuses its capabilities on providing financial firms with a business-friendly market environment.
For example, the Fn Hub Korea holds an annual event called "FSS Speaks," which is to offer explanations about how the FSS will supervise and inspect foreign financial companies. The Fn Hub Korea also hosts meetings between the FSS Governor and CEOs of foreign financial institutions on a regular basis. Plus, the Fn Hub Korea operates diversified channels to communicate with financial firms and visits businesses if necessary to understand what impediments the firms encounter in Korea.
When it comes to the complaints and suggestions from foreign financial firms, the FSS responds to them at once or reflects on their problems later. Indeed, the FSS relaxed Chinese wall regulations and permitted outsourcing of data processing to offshore IT companies, as foreign companies had consistently asked. Furthermore, the FSS has swiftly accepted report filings on ancillary and concurrent businesses of banks. These regulatory improvements have been receiving positive remarks to date.
Meanwhile, the Fn Hub Korea jointly hosts "Global Companies Job Fair" with Seoul Metropolitan Government with aims to improve business and living conditions for people from abroad and help foreign financial companies find and hire domestic talent. Furthermore, the Fn Hub Korea has published various reference materials, including a financial transaction guidebook and manuals for immigration and living in Korea.
Thanks to these efforts, foreign financial companies which have operations in Korea came to 168 at the end of 2016, about 30 percent greater than the 130 at the end of 2003. The amount of Korean stocks held by foreign investors significantly increased 236 percent from 143 trillion won to 481 trillion won between 2003 and 2016. These indicate that Korea's financial globalization has considerably improved.
The FSS will continue to attempt to push forward necessary policies on developing Korea into a financial hub. First of all, the FSS will greatly improve communication with foreign financial companies. Second, it will do its utmost to create more transparent business and regulatory environments comparable to those of advanced economies, providing the financial ecosystem where fair competition is available.
In particular, the FSS is going to improve financial regulations to make them consistent with global standards. At the same time, it will work hard to establish a new financial regulatory paradigm to brace for the Fourth Industrial Revolution, including fin-tech and information technology. To this end, the FSS will make a shift in our supervisory framework from ex-ante supervision to ex-post supervision. Moreover, it will pave the way for foreign financial companies to introduce new products based on creativity and autonomy.
The FSS will also strive to create a business-friendly environment to facilitate the entry of foreign financial companies into the Korean market by boosting cross-border transactions and attracting global floating money, seeking a new source of income.
The FSS expects that its tireless efforts will pay off sooner or later, encouraging more foreign companies to start businesses in Korea. It hopes that both consumers and market players can enjoy benefits of Korea's development into a global financial hub.
The author is First Senior Deputy Governor at the Financial Supervisory Service.
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