Securities + Bonds, New Securities allowable – Early Introduction of Corporate Pension System

To extend the middle/long term demand base of stocks, the new issue of securities such as the stock-linked bonds that is the middle type of stock and bond, will be allowed.

The related regulations will be eased and the assets operation-related regulations will be released to increase the securities investment for various Pension Funds.

For the long run, the securities-related institutes such as Korea`s stock exchange, KOSDAQ stock market and Korea Future Exchange are integrated, and so the commission and taxes related to the stock will be reduced.

On July 22, the ministry of finance and economy announced “We will take the expansion measure of middle/long term stocks demand base to strength the securities base as the capitals are invested into the stock market”.

As the policy that solves the supply demand disagreement for the changeable fund market since the financial crisis, this measure cannot be a favorable factor of the short term because it is the middle/long term measure. The ministry of finance and economy decided to improve the sales conditions of indirect investment products of banks, and to issue the new securities of integrating features of Securities and Bonds.

Byeon, Yang-Ho, the director of financial policy bureau, the ministry of finance and economy said “We already entrusted the service required for introducing the mandatory convertibles and securities-linked bonds which determine through inter-working the bond interest or principal with the stock index or certain stock price”.

Besides, securities companies can transact the financial Derivatives which can avoid the risk of stocks fluctuation. To increase the investment on the product of performance dividend, the corporate pension system will be introduced promptly through consent of labor, management and government.

In addition, the government decided to strengthen the connection between 3 markets including Korea`s stock exchange, KOSDAQ stock market and Korea Future Exchange, and to reduce the transaction commission by decreasing the supervision expense and information technology investment expenses.

Rae-Jeong Park ecopark@donga.com