Korea Financial Investment Association (Kofia) plans to go after the financial regulations that segregate the domestic and foreign financial firms operating in Korea to reform them next year.
At a briefing session held on Dec. 7 in Yeouido, Seoul, Kofia Chairman Hwang Young-key said the core business of Kofia next year will be deregulating the financial regulations that segregate financial firms in different areas of the industry and foreign financial firms, including securities and asset management firms doing business in Korea. He will also see that Individual Savings Account can be opened to vitalize the ISA. The chairman said to the extent that foreign financial firms are put in advantageous positions, Kofia will remove financial regulations that segregate domestic financial firms from foreign firms operating in Korea. Some regulations put domestic securities firms and asset management firms in disadvantaged position as they don’t regulate foreign securities and asset management firms in Korea.
He said he would target the regulations that put financial firms in certain areas of the financial sector in disadvantageous positions, in particular, unfair regulations on only financial investment firms, not banks or insurance firms. Not allowing securities firms’ corporate payments and maintaining limits on foreign exchange transactions for securities firms are a good example of segregation in sector between domestic and foreign financial firms operating in Korea, Hwang said.
Hwang said he will work to make sure financial regulations are centered on principles of capital markets and financial investment businesses. By “principles,” Hwang meant that financial regulations are based on principles so their implementation is left to individual financial firms autonomously.
He added that it will take time, but the regulations should be principle-centered. He will hold talks with financial authorities and the parliamentary committees responsible for financial policies to change update financial regulations so the implementation and the process will be left up to financial firms.
Hwang said he will try to expand the ISA business, too, by broadening the beneficiaries of tax incentives and those offered the ISA Season 2. The ISA Season 2 has become the base for Rep. Kim Jong-sok’s legislative proposal to reform to the Tax Exemption Special Example made on Dec. 2, which includes expanding the taxation exemption limit from 2 million won to 4 million won. For working people, the exemption limit is to be raised to 5 million won from 2.5 million won. The reform proposal also relaxed the admission requirement for seniors in that they won’t have to submit paperwork to back up their earnings.
Kofia also plans to categorize the ISA into several groups, including the ISA for juniors, he ISA school expenses, ISA for residential homes, and other special purpose ISAs.
Hwang said ISA account holders have been boosted to 2.4 million people since it was introduced in March with the amount of trust funds in the accounts totaling over 3 trillion won. Next year, he will come up with a complete ISA that can become an important way to prepare for the latter part of life for seniors, the Kofia chairman said.
Kofia establishes regulations such as rules on fair business activities among member firms and standards for securities underwriting. In addition, the association also sets various guidelines, such as standard investment product recommendation rules, and Chinese Walls and internal control standards to prevent conflicts of interest.
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A view of the building in Seoul where KOFIA has offices.(Photos: KOFIA)
