A stock ticker at Hana Bank headquarters in central Seoul, Friday, shows the benchmark KOSPI closing at 7,847.71, up 0.41 percent from the previous session, and the secondary bourse Kosdaq closing at 1161.13, up 4.99 percent. Yonhap
The Korean government is moving to allow foreign investors to directly trade exchange-traded funds (ETFs) and exchange-traded notes (ETNs) through omnibus accounts, expanding market access beyond individual stocks as authorities seek to attract more foreign capital into the local market.
According to financial authorities, Sunday, the Financial Services Commission (FSC) is seeking revisions to regulations on financial investment business to allow foreign investors to directly invest in locally listed ETFs and plans to issue a prior notice in June.
The proposed revision would expand the scope of assets tradable through foreign omnibus accounts — currently limited to stocks — to include ETFs and ETNs.
The omnibus account system allows foreign investors to trade Korean equities directly through overseas brokerages, without the need to open separate accounts with local securities firms.
The move follows remarks by FSC Chairman Lee Eog-weon during a press conference on Thursday.
“There are growing requests from foreign retail investors who want to invest in Korean stocks, but the institutional framework has not been fully equipped to accommodate such demand,” Lee said. “We will expand the scope of foreign omnibus account trading from stocks to ETFs and ETNs.”
Amid the bullish rally in the benchmark KOSPI, overseas brokerages have increasingly called for direct access to Korean ETFs to meet growing foreign demand for Korean index products.
Officials are said to have considered the need to align with global standards, noting that while Korean investors can directly purchase overseas ETFs, foreign investors currently cannot directly access Korean products.
Authorities are reviewing the need for tax rule adjustments before the system can be fully implemented. Under the current system, dividend income earned by foreign investors from Korean stocks is subject to withholding tax by local financial firms, but taxation rules for ETF and ETN investments remain unclear.
The Ministry of Finance and Economy is expected to reflect related measures in its tax revision proposal scheduled for July.
Market watchers expect the upcoming measures to help stabilize the weakening Korean won by attracting additional foreign capital inflows into local financial markets.
From April 26 to May 15, trading volume through foreign omnibus accounts totaled 5.8 trillion won ($3.8 billion), while net purchases came to 2.2 trillion won.