Politic-Economic-Society-Tech

Korea takes aim at Asia's Big Three

SEOUL - The South Korean government has decided to allow foreign exchange brokers from abroad to work in the country soon as part of efforts to develop Seoul into one Asia's four major financial hubs, the others being Hong Kong, Singapore and Tokyo, the Ministry of Finance and Economy has announced. 

"We are considering inviting foreign currency brokers from abroad on a mid- and long-term basis with the aim of deepening and widening the fledgling domestic foreign currency exchange market, which has neither grown enough to match its economy nor seen active dealings of futures and derivatives," Director Choi Chong-koo of the Foreign Exchange Market Division said. 

Briefing reporters on the outcome of a Financial Market Development Committee meeting presided over by Deputy Prime Minister Jin Nyum, Choi also said, "The government will consider, on a mid- and long-term basis, lifting the registration system for foreign currency brokers to allow both domestic and foreign brokers to make free entry into the market." Only two foreign currency brokers are currently licensed to operate in the country. 

Choi said that the government was also considering enabling foreign currency brokers to deal with foreign currencies without involvement of the Korean won. 

Under the measures for the mid- and long-term financial market development discussed in the meeting, the government has set 2002-05 as the first phase for increase in foreign currency transactions by developing derivatives and other diversified products, expanding the business areas for foreign currency brokers and permitting investment trust firms, insurers and brokerage houses to conduct foreign currency transactions. 

In the second-phase (2006-08), the government will activate cyber trading and allow transaction of foreign currencies without using the Korean won. The third phase plan (2009-11) involves raising the country's foreign currency transaction system to the level of the top countries in the OECD. 

Other measures include training foreign currency dealers, pursuing deregulation and developing ways to reduce risk through an early warning system against inflow of hedge funds. 

The ministry will form a task force by the end of July to draw up the final version of the measures by the end of October through inter-government agency consultations and public hearings. 

Ministry statistics shows that the volume of the country's daily foreign currency market reached US$8.9 billion in 2000, far below Hong Kong's $78.6 billion, Singapore's $139 billion and Japan's $148.6 billion. 

(Asia Pulse) 

source: Asia Times Online, July 13, 2001