FSC Korea enacted an enforcement decree and a supervisory regulation to provide details for the management of financial benchmarks, as the Financial Benchmark Act will go into effect on November 27, 2020. FSC will hold a review committee meeting to determine the criteria for designating critical benchmarks and start procedures in the first half of 2021 for the designation of critical benchmarks and administrators.
The key provisions of the new regulatory regime for financial benchmarks include:
- Establishment of a review committee to discuss the designation and cancellation of critical benchmarks and other important matters regarding financial benchmarks.
- Provision of details that should be included in an operational rule established by an administrator of critical benchmarks; the operational rule is aimed to stipulate requirements for administrators of critical benchmarks, contributors of input data, and users of critical benchmarks.
- Requirement for administrators of critical benchmarks to establish a committee for the management of critical benchmarks. The enforcement decree provides details regarding the composition and operation of the management committee.
- Details that should be included in an operational rule established by an administrator of critical benchmarks. The operational rule is aimed to stipulate requirements for administrators of critical benchmarks, contributors of input data, and users of critical benchmarks. Administrators, contributors and users are required to preserve their data and records regarding critical benchmarks for five years.
- Stipulation of the types of financial contracts in which financial institutions are required to provide consumers with an explanatory document on critical benchmarks, including savings, term deposits, loans, financial investment contracts, and insurance contracts.
Related Link: Press Release (PDF)
Keywords: Asia Pacific, Korea, Banking, Financial Benchmarks Act, Benchmarks Reforms, IBOR, FSC
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