2014年-世界发展银行全球_Republic_of_Korea_Financial_Sector_Assessment_Program___Detailed_Assessment_of_Observance_-_IOSCO_Objectives_and_Principles_of_Securities_Regulation_156页_1mb

Detailed Assessment of Securities Regulation in the Republic of Korea

Core Content

This report provides a detailed assessment of the implementation of the IOSCO Objectives and Principles of Securities Regulation (IOSCO Principles) in the Republic of Korea, conducted as part of the IMF-World Bank Financial Sector Assessment Program (FSAP) in 2014. The assessment was carried out by Eija Holttinen from the IMF and Andrea Corcoran from the World Bank.

Main Findings

Regulatory Structure

• The Korean securities regulatory framework is composed of three main agencies: the Financial Services Commission (FSC), the Securities and Futures Commission (SFC), and the Financial Supervisory Service (FSS), established under the Act on the Establishment of the Financial Services Commission (AEFSC).
• The FSC sets financial and supervisory policy across all financial institutions and markets.
• The SFC handles matters related to unfair trading and accounting and auditing.
• The FSS is responsible for the supervision, inspection, and investigation of financial institutions under the FSC or SFC.
• The Ministry of Strategy and Finance (MOSF), the Bank of Korea (BOK), and the Korea Deposit Insurance Corporation (KDIC) also play significant roles in the financial system.
• The FSC is a Ministerial/Cabinet-level agency with 287 staff, while the FSS has 1,750 employees, of which 23% are dedicated to capital markets.
• The FSC oversees the FSS, which is a publicly chartered private corporation.
• The FSC has a separate Board but no staff or secretariat of its own, relying on FSC resources.
• Interlocking governance arrangements exist, with the FSC Vice Chairperson serving as the SFC Chairperson, and the FSS Governor on the FSC Board.
• The Minister of Strategy and Finance and the BOK Deputy Governor are ex-officio commissioners of the FSC with full voting rights, which could potentially affect the independence of the FSC's decisions.
• Self-regulatory organizations (SROs) such as the Korea Exchange (KRX), Korea Financial Investment Association (KOFIA), and Korean Institute of Certified Public Accountants (KICPA) play a role in the regulatory process.

Market Structure

• The KRX is the central exchange, combining the Korea Stock Exchange, KOSDAQ, and KOFEX (futures).
• The KRX acts as the central counterparty (CCP) for exchange-traded securities and futures.
• The Korea Securities Depository (KSD) serves as the central securities depository.
• The KRX has 1,788 listed companies and a market capitalization of USD 1,179.4 billion as of 2012.
• It also trades the KOSPI 200, one of the world's most traded futures contracts, with a daily turnover of 7.4 million contracts.
• KONEX, a new platform for small and medium enterprises, was announced in June 2013.
• Alternative trading systems (ATS) and multilateral trading facilities (MTF) are not currently permitted, though the law has been updated to allow for the creation of a CCP for OTC derivatives.

Assets Under Management (AUM)

• As of end-2012, the total AUM in domestic collective investment schemes (CIS) was KRW 307,592 billion.
• The majority of funds are investment trusts, with a smaller portion being investment companies.
• Private placements are common, with the hedge fund industry remaining relatively small (AUM of KRW 1,739 billion as of end-2012).

Precondition for Effective Securities Regulation

• Korea is a civil law jurisdiction with legislation influenced by international models (UK, US, EU).
• It has an independent judiciary, and prosecutors are court officers.
• The insolvency law supports settlement finality, protection of customer funds, and close-out netting.
• The commercial law, originally based on the German model, has been updated to align with Anglo-Saxon corporate governance.
• There are residual legal issues related to pledged collateral in indirect holding systems.

Challenges and Recommendations

• Complex governance structures obscure decision-making transparency, particularly in determining which authority is ultimately responsible for supervisory or enforcement actions.
• Pre-deliberation committees complicate the decision-making process.
• Administrative sanctions are limited in scope and amount, and criminal enforcement is slow and inefficient.
• Ongoing disclosure requirements for issuers and CIS are prescriptive, ensuring compliance with IOSCO Principles, but need to be reviewed to ensure they serve investor interests and market evolution.
• Monitoring of CIS custody and valuation is important to mitigate investment risks.
• The current systemic risk monitoring process does not fully account for potential risks from the securities sector.
• Regulatory reform and coordination among authorities should be strengthened, with improved transparency and feedback mechanisms.
• Enhanced communication and monitoring of personal trading restrictions and compliance should be implemented.
• The FSC and FSS have sufficient authority to share information with domestic and foreign counterparts, but cooperation and coordination can be improved.
• Comprehensive disclosure applies to issuers and CIS, with clear derogations from disclosure obligations.
• Shareholder rights are addressed, and disclosure of large shareholdings is required.

Key Information

• Compliance: The current regulatory framework achieves good overall compliance with the IOSCO Principles.
• Legal Framework: Multiple laws govern the securities regulatory framework, including the FSCMA, AEFSC, CPA Act, and others.
• Cooperation: The FSC and FSS are signatories to the IOSCO MMoU and have bilateral MoUs with foreign counterparts.
• Enforcement: The FSS has inspection, investigation, and surveillance powers, but enforcement is limited in terms of sanctions and speed.
• Self-regulation: SROs are involved in the regulatory and supervisory process, and the FSC/FSS have a comprehensive oversight program.
• Market Volatility: The Korean market is highly volatile, with over 60% of trading by retail investors and 20% by foreign investors.
• Need for Improvement: There is a need for better operational transparency, expanded on-site examinations, and improved enforcement mechanisms.

Conclusion

The Korean financial sector has made significant progress in aligning with international standards, particularly in securities regulation. However, challenges remain in enforcement, transparency, and systemic risk management. Refinement of governance structures, enhancement of enforcement powers, and improvement of self-regulatory mechanisms are recommended to ensure effective and independent regulation.