meta_id 3171459

On May 18, 2026, South Korea's Financial Services Commission (FSC) announced amendments to the Financial Investment Business Regulations and its Enforcement Rules to enhance liquidity risk management across the securities industry. The FSC is expanding liquidity ratio regulations currently applied only to comprehensive financial investment business operators (10 companies) and derivative-linked securities issuers (13 companies) to all 49 securities companies. Currently, other securities firms face only indirect regulation through management evaluation assessments. The expansion aims to strengthen liquidity risk management capabilities across the entire securities sector, including smaller firms. The FSC is introducing a new "adjusted liquidity ratio" that better reflects crisis scenarios. The current liquidity ratio (liquid assets divided by liquid liabilities) does not account for price volatility risks or contingent liabilities such as debt guarantees. The revised calculation applies haircuts (discounts) to liquid assets ranging from zero percent for government bonds and highly-rated securities to 30 percent for synthetic exchange-traded funds, reflecting potential fire-sale losses during market stress. The denominator now includes contingent liabilities, with debt guarantee obligations calculated based on securities credit ratings and historical fulfillment rates. The FSC is also refining how securitised assets are classified by their actual liquidity characteristics. Open-ended funds like exchange-traded funds will be measured by redemption periods, while closed-end funds like real estate funds will use remaining maturity. Collateralised securities transactions will now reflect differentiated outflow rates based on collateral quality, creating incentives for firms to use higher-quality collateral. The FSC is conducting a 40-day public notice period from May 21, 2026 to June 30, 2026. Stakeholders may submit comments to ncw1122@korea.kr. The amendments take effect January 1, 2027.