South Korea's Financial Services Commission (FSC) announced today that the government adopted the revised Implementation Order of the Financial Investment Services and Capital Markets Act (FSCMA) at a cabinet meeting held on June 5, abolishing the registration requirement for foreign investors. The foreign investor registration requirement has been in place for about 30 years since 1992. The requirement is expected to be repealed on December 14 this year (that is, six months after the amendment was issued on June 13).

Under the Foreign Investor Registration system, foreign investors are required to register with the Korea Financial Supervisory Service (FSS) before investing in domestic listed securities (stocks, bonds, etc.). For foreign investors, they must register with a financial institution and obtain a certificate of registration (Foreign Investor ID) before they can open an investment account with a securities company. As the process can be very time-consuming and requires a lot of paperwork, it has been pointed out that the rule is a significant barrier for foreign investors to invest in the Korean stock market. In addition, such registration requirements for foreign investors are not implemented in major advanced economies such as the United States and Japan. Global investors have repeatedly called for the need to change South Korea's regulations in order to bring them more in line with global standards.

South Korea's foreign investor registration system was introduced in 1992 to manage the maximum investment limit for foreign investors. Although the country removed investment restrictions for foreign investors in principle in 1998, the foreign investor registration system has not changed much in the past 30 years. At present, only 33 of the more than 2,500 listed companies in South Korea are listed by the authorities and limit the total shareholding of foreign investors, and two projects limit the amount of foreign individuals.

After the amendment to the Financial Investment Services and Capital Market Law takes effect, foreign investors can open investment accounts at Korean securities companies without having to register with the FSS in advance. Foreign corporate entities can use their legal entity identifier (LEIs), and individual foreign investors can open investment accounts using their passport numbers. Investors who have already obtained foreign Investor ids can continue to use their investor ids to minimize the inconvenience caused by the system change. Despite the removal of the foreign investor registration requirement, the country's authorities still consider it necessary to regulate the total number of foreign investor holdings and individual limits for specific projects.

After the foreign investor registration system is abolished, foreign investors will have more opportunities to enter the Korean stock market, which will increase foreign investors' investment in Korea.

The FSC, together with the FSS and the Korea Financial Investment Association, will develop guidelines to ensure a smooth transition to the removal of foreign investor registration requirements. In addition, other measures in the "Plan to Improve Foreign Investors' Access to the Korean capital Market" released by the country in January that call for changes to financial investment business rules, such as expanding the scope of over-the-counter transactions reported after the fact and making it easier for foreign investors to use comprehensive accounts, will be finalized through FSC review and will take effect together with the abolition of foreign investor registration requirements.