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S Korean regulator angles for overseas interest in securities

The South Korean Financial Supervisory Commission has unveiled a slew of rule changes aimed at encouraging foreign investors to trade in securities in the domestic market.

The new rules will take effect today, the regulator said in a statement on Sunday. Changes include allowing foreigners to invest in domestic bonds through omnibus accounts managed by the International Central Securities Depository.

An omnibus account is a general account held by a financial intermediary that may be used to clear or settle transactions for clients of the account holder. It allows individual foreign investors not to reveal their identity.

Foreign investors had been required to register with the Financial Supervisory Service and open an account under their own names to trade local bonds.

Finance Minister Kwon O-kyu said in May that the government would introduce the omnibus account system for foreign investors late last year or early this year.

From this year, foreigners will also be able to trade in bonds and stocks with other foreign investors off the market, the commission said. Previously, foreign investors could trade in securities only in the market with a few exceptions.

"We expect the revised rules to help South Korea to acquire Developed Market status from FTSE [this] year," the financial regulator said.

In September, FTSE said some restrictions in securities transactions among foreign investors in South Korea were the critical area keeping the country from getting upgraded to the Developed Market classification.

South Korea is now classified as an Advanced Emerging Market.
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