NCR rules on asset management companies to be abolished

1 Net Capital Ratio (NCR) has been serving as a key index to assess soundness of financial firms and has been widely used as standards for financial authorities to take prompt corrective actions.

However, there have been claims by the market participants that the NCR rules are less effective to apply to asset management companies as it is better suited to securities firms’ business model and environment. Therefore, the FSC plans to abolish the NCR rules as a means to improve prudential regulations on the asset management industry. Instead, A new standard, ‘minimum capital requirement’, will be introduced to replace the NCR.

The minimum capital requirement can be derived by adding up regulatory capital requirement, capital requirement for client asset management, and capital requirement for proprietary investments. Regulatory capital requirement is a standard for an asset management company to meet for it to maintain the business license. Capital requirement for client asset management is a reserve money accumulated by each asset management company to use it as a deposit to compensate clients’ financial damages. Lastly, capital requirement for proprietary investments is a sum of accumulated money to be used as a buffer against investment risks.

click the link to read the FSC’s press release -> http://www.fsc.go.kr/downManager?bbsid=BBS0048&no=93081

FSC makes online shopping more convenient

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Online shoppers will be able to shop more conveniently as the FSC plans to introduce more simple online payment process. Currently, shoppers have to go through an additional personal identity verification system such as SMS verification even after logging in the respective website. However, customers will only need to type in ID and passwords as such process will be acknowledged as a verification process that verifies the identity of the respective credit card holder.

However, additional identity verification process will be still valid in case of purchasing products that can be immediately liquidated such as cyber case used in online game sites. Moreover, information related to payment, and ID or password change will immediately be sent to the consumer via SMS or email to prevent possible frauds.

The new measures will go into force within this year after revising related acts.

FSC Chairman’s visit to Gwanggyo Technovalley

FSC Chairman Shin Je-Yoon visited Gwanggyo Technovalley, Suwon to meet the representatives of the technology firms in the cluster.

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Officials from the financial bodies and company representatives actively shared opinions on ways to facilitate venture capital and effectively provide business funds. In particular, U Electronics and Asta, two firms funded by the Growth Ladder Fund, shared their experiences of expanding their business with the help of the government’s financial assistance.

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Chairman Shin explained in detail the FSC’s detailed plan to cultivate innovation-friendly environment announced on August 26 and expressed the government’s strong commitment to realize creative finance. Moreover, he urged the financial industry to support the government’s efforts by emphasizing that the success of creative finance depends on financial institutions’ ability to accurately evaluate the value of technology and idea.

FSC Chairman’s interview with the Financial Times on financial deregulation

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The Financial Times internet edition introduced in depth the FSC’s efforts to boost private equity investment and improve investment environment by easing financial regulations.

Take your time and read the article to find out what the Korean government is doing to further develop Korea’s capital markets.

http://www.ft.com/intl/cms/s/0/ebf5ccac-3e3a-11e4-b7fc-00144feabdc0.html#axzz3EHXB34AG

Weekly Global Financial News (Sep 15-Sep 21)

 

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Relief over Scotland gives way to ‘Great Stagnation’ worries, By Reuters, Published: Sep 21

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Scotland’s rejection of independence has calmed investors as one major source of political and economic uncertainty disappeared.

Fed renews zero rate pledge, but hints at steeper rate hike path, By Reuters, Published: Sep 17

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The Federal Reserve repeated its assurance that it will keep interest rates near zero for a “considerable time” but also indicated it could raise borrowing costs faster than expected when it starts moving.

South Korea to sharply boost budget spending to spur economy, By Reuters, Published: Sep 17

http://reut.rs/1uWADOs

South Korea’s government unveiled fiscal spending set to grow for the 2015-2017 period to help the local economy better cope with a tepid global recovery and a continued slump in domestic demand.

China’s house prices fall further, economic gloom deepens, By Reuters, Published: Sep 18

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Worries that China’s economy may be slowing intensified as data showed home prices fell for the fourth straight month, adding to expectations that Beijing will need to do more to spur economy.

Japan, China, South Korea agree to ensure geopolitical risks don’t threaten recovery, By Reuters, Published: Sep 19

http://reut.rs/1qYqS2V

Financial policymakers of Japan, China and South Korea agreed to strengthen regional capabilities to manage financial and economic risks and respond to possible crisis.

Russian PM Medvedev vows to keep economy open, hails pivot to China, Published: Sep 19

http://reut.rs/1sUfMb4

Prime Minister Dmitry Medvedev said that Russia would not isolate its sanctions-hit economy from the West but improving relations with Asian countries has become a key strategy as Moscow has embarked on a pivot to Asia, signing a series of trade and business agreements, mainly with China.

As G20 chases growth goal, members differ on how to get there, By Reuters, Published: Sep 20

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Financial leaders of the Group of 20 top economies remain committed to chasing higher global growth, but were divided on how to achieve it as Germany pushed back at calls from the United States and others for more immediate stimulus.

Time Schedule for Woori Bank Privatization

 

img_adcenter_ci01The Public Funds Oversight Committee resolved that public announcement on the sale of Woori Bank’s controlling stake be made on September 30. Public announcement on the sale of the minority shares will be made in late October. Bidding for both the controlling and minority stakes will be closed on November 28.

First Meeting of the Committee for Financial Innovation

For the last one year and so, the government has been concentrating its efforts in setting the financial industry’s vision and establishing related system to coop with the changing economic structure and conditions. Moreover, the FSC devised and announced comprehensive plan to overhaul financial regulatory system.

However, the financial industry still has long way to go to completely abolish its old and outdated practices. Necessary funds are still not effectively channeled to those in need such as startup entrepreneurs and CEOs of SMEs.

In order to narrow the gap between the real economy and the current conditions of the financial industry, the government and financial sector must work together to come up with tangible outcomes that can be actually be felt by those at the frontline of the economy.

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The first meeting of the Committee for Financial Innovation was held on September 16, to discuss ways to improve unreasonable financial practices, thereby achieve sustainable growth of the financial industry.

During his opening speech, FSC Chairman Shin Je-Yoon mentioned that technology finance must take deep root in the financial system as soon as possible. To such backdrop, according to Chairman Shin, the government will start reviewing each bank’s efforts to promote technology finance in October. Various incentives will be granted to those contributing in the realization of creative finance, said Mr. Shin.

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“Second, venture capital should be further facilitated in order to encourage active investment in creative ideas. We must create a healthy cycle of investing and reinvesting in innovative ideas” Chairman Shin added.

“Third, we must abolish outdated financial practices. Unreasonable inspections and sanctions are the main culprits of hampering financial innovation. Therefore, our priority is to improve the current supervisory system. We will ban financial regulators from imposing excessive sanctions on the employees of financial institutions. We will encourage financial firms to improve unfair internal practices.”

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Chairman Shin said that he believes that the government should open its ears wider to the voices of financial consumers.

Based on firm belief that the answer to the government’s tasks lie in the actual business fields, Chairman Shin will visit local employment center in Seosan and venture companies located in Gyeonggi Province to share opinions with financial consumers about what financial regulations need to be improved.

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“I am confident that the financial sector will push our economy to the next level. I would like to ask for the commissioners of the Committee for Financial Innovation gathered today to actively back the government to realize our goal,” Chairman Shin said in closing.