By Choi Kyong-ae
The Financial Services Commission (FSC) said Sunday it will introduce an omnibus account system for foreign investors from next year in a move to get the Korean stock market included in the MSCI's developed market index.
The government has been striving to have the Korea Exchange classified on the MSCI's World Index as a developed market after the country was excluded from the index review list in 2014 due to the lack of "any significant improvements in key areas negatively affecting accessibility."
Morgan Stanley Capital International has pointed out two major obstacles against Korea's stock market being placed onto the advanced market index. It asked Korea to ease regulations involving foreign investment in stocks and to improve the Korean won's convertibility.
One of them is about to be lifted, with the government stepping up efforts to enhance the local currency's convertibility.
If Korea is included on the MSCI Advanced Market Index, the government expects it will help the domestic stock market move in a less volatile manner during emerging markets-related turmoil.
The MSCI has not added any emerging-market exchange to its developed-market index since 2010.
Through an omnibus account set up by global asset management companies or securities companies, foreign investors are allowed to sell their Korean stocks or make settlements for the sale.
Global asset managers or brokerages such as Goldman Sachs and Merill Lynch have to seek an approval from Korean regulators to handle business here, the FSC said in a statement.
"Foreigners, individuals or funds, who received a foreign investment registration certificate from the Financial Supervisory Service, are qualified to make investments in Korean stocks," an FSC official said Sunday.
In the past, foreign investors had to open an account not only in Korean banks but also in Korean securities companies to make an investment in Korean stocks and they had to handle all financial transactions themselves, he explained.
The government plans to test the omnibus account system from May this year to find out if there are things to be improved further to be implemented in January 2017, the FSC said.
For Seoul to be part of the Advanced Market Index, the MSCI has said Seoul must establish an offshore market where foreign investors are able to trade the won around the clock.
But 24-hour trading of the won offshore could carry increased risks of volatility, market experts warned.
The Financial Services Commission (FSC) said Sunday it will introduce an omnibus account system for foreign investors from next year in a move to get the Korean stock market included in the MSCI's developed market index.
The government has been striving to have the Korea Exchange classified on the MSCI's World Index as a developed market after the country was excluded from the index review list in 2014 due to the lack of "any significant improvements in key areas negatively affecting accessibility."
Morgan Stanley Capital International has pointed out two major obstacles against Korea's stock market being placed onto the advanced market index. It asked Korea to ease regulations involving foreign investment in stocks and to improve the Korean won's convertibility.
One of them is about to be lifted, with the government stepping up efforts to enhance the local currency's convertibility.
If Korea is included on the MSCI Advanced Market Index, the government expects it will help the domestic stock market move in a less volatile manner during emerging markets-related turmoil.
The MSCI has not added any emerging-market exchange to its developed-market index since 2010.
Through an omnibus account set up by global asset management companies or securities companies, foreign investors are allowed to sell their Korean stocks or make settlements for the sale.
Global asset managers or brokerages such as Goldman Sachs and Merill Lynch have to seek an approval from Korean regulators to handle business here, the FSC said in a statement.
"Foreigners, individuals or funds, who received a foreign investment registration certificate from the Financial Supervisory Service, are qualified to make investments in Korean stocks," an FSC official said Sunday.
In the past, foreign investors had to open an account not only in Korean banks but also in Korean securities companies to make an investment in Korean stocks and they had to handle all financial transactions themselves, he explained.
The government plans to test the omnibus account system from May this year to find out if there are things to be improved further to be implemented in January 2017, the FSC said.
For Seoul to be part of the Advanced Market Index, the MSCI has said Seoul must establish an offshore market where foreign investors are able to trade the won around the clock.
But 24-hour trading of the won offshore could carry increased risks of volatility, market experts warned.
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