Domestic securities companies will be included as a foreign currency bond dealer to operate foreign exchange reserves of the Bank of Korea (BOK) next year.
The BOK announced on November 2 that it will accept an application form from domestic securities firms that fit the requirements of qualified investors by international credit ratings to become foreign currency bond dealers until the 24th. The companies will be qualified when they receive a higher credit ratings of “BBB-“, or Baa3 for Moody’s, from two out of three international credit ratings including Standard & Poor's (S&P), Moody's and Fitch,
The BOK said, “With the expansion of domestic investors’ investment in overseas securities, the transactions of foreign currency bonds by domestic securities firms have increased and they now have a stronger competence in dealing compared to the past.” This is the first time for domestic securities companies to participate in as a foreign currency bond dealer of the BOK. Currently, domestic firms’ dealing competence still lag behinds global leading investment bankers but it is the bank’s plan to help domestic firms expand their business overseas. The foreign currency bond dealers will be selected at the end of this year and the companies will be able to trade securities from next year. However, the bank will not reveal the results of selection.
The BOK said, “When companies are chosen as the dealers, they can trade securities from next year. The bank will include domestic securities companies in the dealer pool first and then deal with the companies which have the lowest transaction costs when operating foreign currency bonds in practice.”