The Financial Services Commission ("FSC") announced on
February 1, 2016 that it intends to reform the existing regulatory
regime applicable to foreigners investing in listed securities by
introducing integrated accounts for foreign investors
("Omnibus Accounts"). Amendments to relevant regulations
which will allow for the implementation of Omnibus Accounts are
expected by April 2016 with trials of the new product taking place
from May 2016 and full implementation due in 2017.
Once the Omnibus Account system comes into effect, global
securities companies or asset managers will be permitted to open
Omnibus Accounts with Korean securities companies or custodians in
the name of such globalsecurities company or asset manager, and to
process trade orders for its end investors (including, but not
limited to, individuals, corporations, and funds) on an integrated
basis through such Omnibus Account.
Although "Special Nominee Account" system is currently
available whereby trade orders of several end investors are
processed in an integrated manner, such system involves cumbersome
process under which the custodian is required to reconcile the
individual settlement instruction relating to each endinvestor
received from the global securities companies or asset manager with
individual transaction report for each end investor delivered by
the relevant Korean securities company prior to the settlement date
and effect settlement (i.e. integrated orders, separate
settlement). In contrast, the new Omnibus Account to be
introduced will allow the custodian to reconcile the single
settlement instruction delivered by the account holder (global
securities company securities company (i.e. integrated orders,
integrated settlement) which is expected to enhance both process
efficiency and convenience.
However, the existing foreign investor registration system will
be maintained in order to monitor each end foreign investor for
foreign exchange, tax and foreign shareholding etc. purposes under
the new Omnibus Account system whilst introducing criteria for
global securities companies or asset managers which would be
permitted to open an Omnibus Account in its own name, and also
posting of transaction detail report for each end investor
following the settlement date to the regulatory body shall be
required. It is also expected that, although orders of all end
investors may be processed in an integrated manner, netting of sale
and purchase orders amongst end investors will be restricted.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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