Financial Deregulations

The Korea Exchange building.
The Korea Exchange building.

 

In order to establish a capital market-centered financial structure, the Financial Services Commission (FSC) will begin restructuring a bourse system that allows the KOSPI, KOSDAQ, and KONEX markets to compete and advance with their own characteristics. This measure has come up from a critical discussion of whether or not it is desirable for all organizations with different characteristics, including the KOSPI, KOSDAQ, KONEX, Derivative Market, and Market Oversight, to be under one organization, the Korea Exchange (KRX). 

The FSC is also planning to innovative the regulations on the establishment, management, and sales of private equity funds and ease obstacles, including the adjustment of unreasonable risk weight on venture capital investment.  

The KONEX operation method will also be reformed. The market expects that the deposit limit of individual investors in the KONEX market will drop to 100 million won (US$88,754) from the current level of 300 million won (US$266,264).   

The FSC will also improve the participation of domestic financial companies on pension fund operations in order for state assets and financial companies to grow together. In the pension fund operation, which is increasingly expanding, it decided to give more opportunities to domestic financial companies, which had less chance to participate than foreign asset management firms due to a lack of experience. As of the end of September last year, the national financial assets, including pension funds, amounted to 1.263 quadrillion won (US$1.12 trillion), accounting for 31 percent of total financial assets.   

The rule that one financial group can run only one asset management company will be removed as well. 

In the technology finance sector, the FSC will strengthen the roles of the Korea Credit Guarantee Fund (KODIT) and Korea Technology Finance Corporation (KOTEC), so that political finance support can be expanded to venture and startup businesses with high risk through actual condition investigations. It will expand the size of technology finance to more than 20 trillion won (US$17.75 billion) within the year, and also increase the technology finance investment. 

Along with this, the FSC will establish a “fintech support center,” that will provide a one-stop solution system, from financing to administrative and legal problems. It will also come up with an introduction plan for Internet banks by the end of June.

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