Previously, securities firms could only trade OTC derivatives as end-users. Under the new regulations, however, securities firms operating in the country can market OTC derivatives to corporate and selected institutional clients after receiving approval from the FSC.
The official added that Woori Securities had also applied for a licence but later withdrew its application after failing to meet internal control system and risk management requirements.
While the new business opportunity has been met with great enthusiasm, the current regulations do not allow securities firms to market derivatives products to retail investors. However, under the new Securities and Exchange Act – expected to come into effect next week - retail products such as equity-linked notes and warrants are expected to be classified as securities. This will mean that securities firms with OTC derivatives licences will be able to market these newly classified securities to the country’s retail investors.
The week in Risk.net, February 10-16 2017Receive this by email