Less Red Tape
From now on, foreign investors will not need to turn in written consent to provide personal information when they make investments in domestic stocks. Korean securities firms have required written consent from foreign investors due to the real-name financial transaction system.
The Financial Services Commission and the Financial Supervisory Service announced on Oct. 22 that its Inspection Team received 134 suggestions from financial companies from July to Aug. and accepted 51 of them.
Generally, foreign investors sign contracts through foreign or local securities firms, including Korean branches of foreign securities firms, when they trade Korean stocks. Then the trade information returns to the investors. At this time, if Korean securities firms give information to overseas securities firms, it may violate the Real-Name Financial Transaction Law.
So domestic securities firms unconditionally asked foreign investors to submit written consent to provide personal information. The current Real-Name Financial Transaction Law stipulates that no one can expose one’s trade information to others without written consent or demand.
But the financial regulators have decided to recognize foreign investors’ trade information as information that Korean securities firms offer foreign securities firms for business. They will utilize the exceptional provision in the law that offering trade information necessary for business between financial companies does not require written consent to provide information.
“Demanding written consent to providing information has been an unprecedented practice in the world. The system has hindered foreign investors’ investments in Korean stocks,” said an official at the Financial Services Commission. “This system improvement will help Korean securities companies enhance their profitability, since it clears a major obstacle to inducing foreign investors.”