Making Stock Operations Paperless
All listed stocks and bonds in South Korea have begun to be issued and registered electronically as the country’s stock exchange officially went paperless starting Sept. 16.
The Financial Services Commission (FSC), Ministry of Justice (MOJ) and Korea Securities Depository (KSD) jointly held a ceremony at The Conrad Hotel Seoul Grand Ballroom in Yeouido on Sept. 16 to mark the launch of an electronic securities system. Eun Sung-soo, chairman of the FSC, and Lee Byung-rae, chief executive of the KSD attended the ceremony.
The electronic securities system went into operation after three and a half years of preparations since the law on electronic registration of securities and bonds was proclaimed in March 2016. Under the new system, securities certificates of listed stocks and bonds are all recorded on an electronic register and no longer exist in a paper form. Investors can acquire and transfer their securities rights electronically and have an opposing power against a third party in case of marking and cancellation of trust properties. Unlisted stocks can be registered upon application by the issuer.
The government expects that the new paperless system will reduce risks of counterfeit and theft and allow holders to exercise their shareholder rights in case of a capital increase and dividend payout. It will also save businesses’ time to raise funds and reduce financial companies’ work load from securities in paper form and costs.