On May 11, 2016, the FSC announced comprehensive plans to reform the licensing policies and regulations to promote market competition and innovation in the Korean asset management industry.
- Beginning in June 2016, securities
companies are now allowed to concurrently undertake private fund
management business (including hedge funds and private equity
funds) with their other lines of securities business, subject to
certain Chinese wall requirements and rules.
- However, there must be a physical separation between private fund management business and the company's other securities business.
- Among other requirements, there must be a separate compliance function and personnel.
- As of May 11, 2016, the requirements
for a private fund management company to undertake the management
of a public fund (single asset type) are now reduced to:
- 3 years of experience in discretionary investment management and fund management (at a minimum, 1 year of fund management);
- KRW 300 billion of assets under management (including discretionary investment management assets); and
- No regulatory sanction equating to an institutional warning or above for the past 2 years.
- Also in effect as of May 11, 2016,
the requirements to transition into a fully-licensed asset
management company was reduced.
- Previously, 5 years of experience managing single-asset type public funds, and KRW 5 trillion of assets under management were required to transition into a fully-licensed asset management company.
- Now, 5 years of any type of fund management experience, and KRW 3 trillion of assets under management (discretionary investment management assets included) is sufficient.
- Lastly, the so-called "1 group – 1 asset management company rule" has been abolished.
These measures have been implemented to foster and promote the asset management business in Korea by allowing eligible asset managers to more easily enter the Korean market via mergers and acquisitions. This caters to the private fund management segment. The easing of the eligibility requirements also makes it easier to offer retail fund products in the market.
With the abolishment of the so-called "1 group – 1 asset management company rule," multiple asset management companies can now coexist as affiliates within one financial group.
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