SEOUL: South Korea is considering regulations to prohibit investment banks without domestic securities licences from seeking to arrange overseas bond sales of local issuers, according to people familiar with the matter.
The Ministry of Finance and Economy asked the Korea Financial Investment Association for industry feedback on the potential regulations, and the organisation sent out a survey last week, according to a document seen by Bloomberg.
The government aims to examine the regulatory gaps regarding the domestic business activities of unlicensed investment banks, in an attempt to match global standards, the finance ministry said.
Authorities are concerned that the current setup is unfair to fully licensed institutions that have to bear the cost of maintaining domestic operations while unlicensed firms don’t, the people added.
The move comes as foreign bond sales by South Korean issuers have surged this year by 31% to US$65.6bil from the year-earlier period, according to Bloomberg data.
South Korean issuers as a group rank third behind peers in Japan and Australia for bond offerings in the dollar and euro combined so far this year, accounting for around 13% of all such deals from the Asia Pacific, the data show. — Bloomberg
