South Korea announced changes to decades-old forex transaction rules
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Financial market regulators in South Korea are planning to revise the Foreign Exchange Transactions Act implemented in 1999. The changes to the rule are coming after the public called for a revision, saying that the policy was limiting.
South Korea to revise forex transaction rules
According to the Korean Times, the South Korean government has approved nine securities companies to start offering currency exchange services. These companies targeted individual customers and corporates.
Before this approval, only four brokerage platforms were allowed to provide these services. Additionally, these brokers were only limited to serving corporate clients. The local news publication also said that this initiative would lower the commission on money exchange services, given that banking institutions and securities firms were competing for clients in this market.
The revisions set to be introduced to the decades-old forex transaction rules will also affect various other areas. For example, residents of South Korea are required to remit below $50,000 annually to guarantee that they will not submit documentary evidence about the source of the funds. However, with the new changes, South Koreans will only submit evidence for annual remittances exceeding $100,000.
The revised changes will also ensure that businesses in the country are not limited to $30 million of the foreign currency amount that can be borrowed without having to report the transaction to the Finance Ministry. The new changes have revised this amount to $50 billion.
These changes come in response to the owners of businesses in South Korea seeking to expand their presence globally. The policy changes also require businesses based in South Korea not to be mandated to file regular reports with financial authorities about their overseas branches or when they hold a stake of more than 10% in any foreign company. The changes will see these organizations filing this report annually.
South Korea supports offshore firms offering FX services
South Korean regulators appear to be introducing changes to attract more financial services. Besides these changes, the country is also planning to approve the involvement of overseas companies in the local forex market to catch up with global standards.
The country is also planning to extend the operating hours for the forex markets to 17 hours daily. The extension will allow activities in the country to run at par with the business hours that are adhered to by businesses in London.
Under the current rules, there are only 54 certified local institutions in the country, such as banks and securities companies, that are approved to provide services in the forex market in South Korea.
The South Korean government is planning to amend this policy to ensure that registered offshore companies can also participate in the country’s spot and forex swap exchange business. The only firms that cannot participate are principal trading companies and hedge funds.