South Korea's Financial Supervisory Commission has unveiled a slew of rule changes aimed at encouraging foreign investors to trade in securities in the domestic market.
The revised rules will take effect Jan. 1, 2008, the financial regulator said in a statement 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 are currently 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 the government would introduce the omnibus account system for foreign investors later this year or in early 2008.
From next year, foreigners will also be able to trade in bonds and stocks with other foreign investors off the market, the FSC said. Foreign investors currently can 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 next year," the financial regulator said.
In September this year, FTSE said some restrictions in securities transactions among foreign investors in South Korea were the critical area keeping the country from getting upgraded to Developed Market classification.
South Korea is currently classified by FTSE as an "Advanced Emerging Market."
FTSE Group is a financial information company owned by The Financial Times and the London Stock Exchange.