Investing in Domestic Capital Markets Made Easier for Foreign Investors

The Financial Services Commission has disclosed a series of measures aimed at improving foreign investors‘ access to domestic capital markets, effective from 14 December 2023. The reforms involve the elimination of the foreign investor registration requirement, enabling investors to open accounts using an LEI or passport number without prior registration. Existing foreign investor registration numbers will still be valid, minimizing disruption.
Additionally, amendments to the omnibus account system for foreign securities firms will ease reporting obligations, transitioning from instantaneous reporting at settlement (T+2) to a monthly reporting cycle. Under the revised rules, foreign securities firms must report end-investors‘ transaction details to a domestic securities firm’s omnibus account by the last day of each month. The domestic firm, in turn, reports to the Financial Supervisory Service (FSS) by the 15th day of the following month. This modification is anticipated to encourage the utilization of omnibus accounts by foreign securities firms and enhance their access to domestic stock markets.
Furthermore, changes in foreign investors‘ OTC transactions are outlined. Previously, FSS preliminary examinations applied to most foreign investors‘ OTC transactions. Effective immediately, the scope of OTC transaction types eligible for ex post reporting will expand, reducing reporting burdens and enhancing convenience for foreign investors participating in OTC transactions.
To ensure the effective implementation of the revised regulations, the government and relevant organizations plan to establish a joint inspection team. Concurrently, an updated version of the foreign investors‘ guide will be disseminated through the FSS’s website, supporting comprehensive understanding and compliance with the altered framework. The phased introduction of a mandatory English disclosure rule for KOSPI listed companies from 1 January 2024 is an additional measure disclosed by the FSC, aimed at bolstering transparency and accessibility for international investors.