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South Korea Prioritizes Capital Market Enhancement to Boost Investor Confidence

The Financial Services Commission (FSC) of South Korea has reaffirmed its commitment to fostering the growth of the country’s capital markets while bolstering financial stability to instill higher levels of investor confidence.

With the goal of bolstering investor trust, the FSC has announced its intention to implement a series of measures aimed at enhancing the integrity of capital markets. A key focus of these measures is to reform the management of listed companies’ stocks, a move designed to safeguard the interests of general shareholders. This comes in response to concerns that some companies exploit treasury stocks to disproportionately benefit major shareholders.

The Vice Chairman of the FSC emphasized that the organization is poised to unveil a comprehensive strategy to address stock-related malfeasance in the third quarter. This strategic approach aims to not only combat fraudulent activities but also to navigate periods of market volatility, ultimately striving to restore the faith of investors.

The FSC’s dedication to market improvement extends to safeguarding the interests of small investors. Among these efforts are the implementation of measures that include advance notifications regarding insider trading, the enforcement of Mandatory Tender Offers, and the imposition of stricter penalties for unfair trading practices.

In a recent development, the National Assembly successfully passed legislation aimed at imposing more stringent penalties for unfair trade. This legislation, slated to come into effect next year, underscores the government’s resolute stance against unethical market behavior.

In line with these endeavors, the financial authorities are actively working to enhance foreign investors’ access to information about South Korea’s capital markets. Commencing in December, foreign investors will be able to pre-register to purchase the nation’s stocks and bonds. In an effort to facilitate this process, an English dissemination system will be implemented next year, further simplifying the access to vital market information.

Additionally, the FSC is ushering in a new era of transparency by mandating that companies listed on the South Korean Stock Exchange (KOSPI) with assets totaling 10 trillion won ($7.5 billion) or more submit key documents in English starting from the following year. Looking ahead, this regulation will be extended to encompass companies listed on the South Korean stock market with assets of 2 trillion won or more, slated for implementation in 2026.

South Korea’s proactive approach to revamping its capital markets is a testament to its commitment to creating a fair, transparent, and resilient financial ecosystem. By addressing regulatory gaps and aligning with global standards, the country aims to not only bolster its economic standing but also solidify its status as an attractive destination for both domestic and international investors.

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