South Korea Plans to Open Domestic ETFs to Foreign Retail Investors

According to the business section of the Chosun Biz, Lee Yeon-Won, the head of South Korea's Financial Services Commission, stated on May 21st that the regulatory agency will revise the relevant regulations to allow foreign individual investors to trade Korean-listed ETFs and ETNs through local brokerages' "integrated accounts." Lee Yeon-Won said:

"We will actively promote the globalization of the capital market, attracting global funds and high-quality assets inflow. Foreign individual investors wish to buy South Korean stocks and have made many calls, but in fact, the mechanism to meet these demands is not well-established.”

Under the current arrangement, foreign individual investors can already directly buy and sell South Korean stocks through the integrated accounts of South Korean brokers, but they are still unable to trade ETFs, ETNs, nor can they open separate securities accounts in South Korea.

The South Korean Financial Services Commission pointed out that between April 26th and May 15th of this year, the transaction amount of foreign individual investors in the South Korean stock market has reached 580 trillion won. If ETFs and ETNs are included in the investible range, the way for foreign capital to allocate South Korean assets will expand from individual stock investment to index and thematic products, which is expected to significantly enhance market attractiveness.

To speed up the policy implementation, the regulatory agency plans to issue "no-action letters" to brokers intending to sell ETFs and ETNs before the formal revision of the regulations. In addition, the South Korean Financial Services Commission will also hold the "Korea Premium Week" event in September, conducting investor relations promotion towards global investors to further attract foreign capital inflow into the South Korean stock market.