Foreign investment in South Korea is becoming easier. Currently, it is necessary to separately open an account with a Korean brokerage firm, but in the future, it will be sufficient to open a consolidated account with a local securities firm. Financial authorities believe that this improvement in the system will lead to new capital inflows.
On the 2nd, the Financial Supervisory Service announced that it would expand the entities that can open a consolidated account for foreign investors from the existing ‘affiliates of domestic financial investment firms and foreign securities firms in which they are major shareholders’ to those that do not meet this criterion. This relaxes the requirements for opening accounts.
In addition, to secure the effectiveness of actual supervision over foreign securities firms, it will clarify the contractual relationships between domestic and foreign securities firms. The FSS plans to establish guidelines that include the reporting system, client verification obligations, and operational procedures for domestic securities firms that provide consolidated account services in consultation with the Korea Financial Investment Association.
On this day, the Financial Services Commission designated the above system as an innovative financial service (혁금). Once designated as 혁금, it can conduct related operations even before the legal grounds for the services are established. Financial authorities intend to operate the service on a trial basis to assess the overall operational situation of the improved consolidated account system and identify any additional necessary adjustments.
The FSS said, “It has become the same as how domestic individual investors invest in overseas stock markets through domestic securities firms,” and added, “This will enhance the accessibility of non-resident foreign investors to domestic stocks and contribute to the advancement of the capital market, including the promotion of new capital inflows.”