South Korea implements product pre-approval regulation

New OTC derivatives will need approval

South Korea’s new derivatives testing system came into effect on June 13 in a bid to counter the bankruptcy of many small firms resulting from risky investments in foreign exchange derivatives during the financial crisis.

The New Product Approval (NPA) system requires financial investment companies, such as investment dealers and investment brokers, to receive pre-approval from the Korean Financial Investment Association (Kofia) for new over-the-counter derivatives. Korea is the first country to