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| Financial Services Commission (FSC) Chairman Kim Joo-hyun speaks during a deregulatory meeting held at the headquarters of the Korea Financial Investment Association (KOFIA) on Yeouido, Seoul, Thursday. Courtesy of FSC |
Gov't aims to facilitate foreign investors' access to Korean capital market
By Anna J. Park
The requirement for foreign investors to register their identities before making investments in Korea will be lifted, as the financial authorities aim to innovate the country's regulations to better conform to global standards.
This development is according to the Financial Services Commission (FSC), the country's top financial regulator, on Thursday, as it held its ninth deregulatory meeting ― with a total of 15 related ministry chiefs as well as private market experts ― earlier in the day. During the meeting, the participants decided to push forward with regulatory changes to facilitate the convenience of foreign investors investing in the Korean market.
First off, the financial authorities plan to scrap the country's long-held requirement for foreign investors to register their identities, which was adopted back in 1992. Instead, institutional foreign investors can use their internally used legal entity identifier (LEI), and retail foreign investors can use their passport number. The LEI is a standardized form of identification adopted in the G20 countries back in 2011.
"The government will abolish foreign investors' ID registration requirements, which have been applied to investments in every listed security in Korea," FSC chief Kim said. "The registration system adopted in 1992 has long been criticized as a regulation that does not fit global standards, yet it has been maintained for over 30 years," he added.
Kim explained that the FSC and private sector together thoroughly reviewed the system, concluding that it is no longer necessary.
"Foreign investors will be freely investing in the Korean capital market, using individual passport numbers or legal entities' LEI numbers, which are globally accepted and used," Kim explained
FSC Chairman Kim Joo-hyun explained that the local capital market system achieving global standards will be the main focus of this year, as opposed to the top financial regulator's focus on raising minority shareholder value and rights over the last year. He said Thursday's deregulatory meeting aimed at boldly breaking obsolete regulations that no longer serve the globalized Korean capital market.
In addition, institutional foreign investors will no longer have the obligation to report the details of their investment immediately, within the "day of the trade plus two days (T+2)" deadline when their transaction payments are settled. They will be asked to submit the details of their investment only when doing so is deemed necessary by the authorities for cases like market monitoring and taxation.
Foreign investors will also be able to enjoy more autonomy in a wider scope when it comes to over-the-counter trades.
And from 2024, listed companies that have market cap sizes that exceed 10 trillion won ($8.1 billion) will be required to issue important public disclosure information in English. This measure is expected to strengthen global investors' information access to locally listed companies.
The set of policy directions discussed at Thursday's deregulatory meeting will be officially announced by the FSC next Wednesday.
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