Korea Securities Finance Corp (KSFC) plans to introduce key measures to boost the country’s securities lending market and ease regulatory, collateral and geopolitical pressures.
Jiwon Jung, chief executive of the KSFC, outlined four key tasks for the organisation in Seoul at the PASLA/RMA event on Wednesday.
First, KSFC will introduce a collateral provision-type securities lending business to reduce the collateral burden of market participants.
Secondly, the firm aims to strengthen its role as market maker in the repo market in order to stabilise the Korean money market and to promote short-term financial transactions.
Thirdly, KSFC will make preparations to provide Korean financial investment companies with foreign currency liquidity – boosting access to the FX market.
In addition, the group - which provides various financial services such as securities-backed loans to investment houses - plans to introduce the Korean-style securities financing system to other countries.
Since 2010, the Korean SBL market has grown in size, with stock and bond lending balances each increasing at an average annual rate of 27% and 8% respectively.
The KSFC aims to maintain the growth through the four work areas.
“The introduction of SBL-related regulations, such as the SFTR in Europe and the net stable funding ratio of the FSB may affect the growth of the Korean SBL market,” Jung is expected to say on Wednesday.
“Also EU member states have been witnessing a spread of an EU exit and movement following Brexit and the US has been strengthening protectionism.
“As countries around the world are increasingly pursing their own interests, the level of political instability is rising.
“Now is the time to transition toward qualitative growth, and I believe the role of KSFC is of utmost importance in such a transition period.
“KSFC will lead the effort of increasing the benefits enjoyed by institutional investors at home and abroad and revitalizing the overall capital market by advancing securities-based liquidity creating techniques.”