Employees of foreign companies in South Korea who receive shares from their overseas headquarters as performance rewards will now be able to sell them directly without needing to transfer them to a domestic brokerage firm first. (Image courtesy of Kobiz Media)
SEOUL, Feb. 28 (Korea Bizwire) – Employees of foreign companies in South Korea who receive shares from their overseas headquarters as performance rewards will now be able to sell them directly without needing to transfer them to a domestic brokerage firm first.
The Financial Services Commission announced on February 27 that a revision to the “Enforcement Decree of the Act on Capital Markets and Financial Investment Business” containing this provision was approved at a Cabinet meeting.
Previously, individual investors and others had to go through domestic brokerage firms to trade foreign-listed securities and foreign currency derivatives without exception. This was to apply the same investor protection systems used for trading domestically listed securities and to monitor related foreign exchange transactions.
However, exceptions have now been made to allow direct sales through foreign brokerage firms in certain cases, such as when domestic employees of foreign companies receive shares of the foreign parent company in their accounts at overseas brokerages as performance rewards, or when inheriting or receiving foreign-listed securities from non-residents.
The Financial Services Commission noted that exceptions were made in response to concerns that transferring to domestic brokerage firms could be impossible or that the transfer process could take several days, causing significant inconvenience to investors.
Additionally, foreign financial institutions registered for foreign exchange business (RFIs) will no longer need authorization for derivative trading business under the Capital Markets Act when trading foreign exchange derivatives through foreign exchange brokers. This is part of the follow-up measures to the “Foreign Exchange Market Structural Reform Plan” aimed at opening the domestic foreign exchange market to foreign financial institutions.
The amended Enforcement Decree of the Capital Markets Act will be promulgated at the beginning of next month, and will take effect immediately.
M. H. Lee (mhlee@koreabizwire.com)
