Korea Eases Cash Collateral Burden for Foreign Investors
The cash collateral burden associated with foreign investors’ trading of domestic stocks is set to be significantly reduced. Korea Securities Depository (KSD) and Korea Securities Finance Corporation (KSFC) signed an agreement on Sept. 28 for a securities-backed loan facility worth up to 1 trillion
Korea has eased the cash collateral burden for foreign investors trading domestic stocks, signing an agreement on September 28 between the Korea Securities Depository (KSD) and the Korea Securities Finance Corporation (KSFC) for a securities-backed loan facility worth up to 1 trillion won. This move is part of efforts to improve market accessibility discussed at a joint ministerial task force meeting in August.
The agreement aims to provide a liquidity safety net to enhance foreign investors' access to the domestic securities market, allowing them to post securities such as stocks and bonds as collateral instead of just cash. This change is expected to reduce the won-denominated liquidity burden on foreign financial institutions, as trading values of the KOSPI have surged significantly.
The 1 trillion-won securities-backed loan agreement will help maintain settlement stability by using KSFC's lending capacity to bridge any liquidity gap that may arise while collateral securities are being liquidated.
Brief written by urgent.news from BusinessKorea's own syndicated text. Machine-written — may contain errors; check the original before relying on it.
