On March 10, 2026, the Ministry of Finance and Economy ("MOFE") issued an administrative notice announcing a partial amendment of the Foreign Exchange Transactions Regulations (the "Amendment"). Once finalized, the Amendment will take effect immediately. The Amendment aims to relax reporting obligations by converting certain pre‑transaction reporting requirements into post‑transaction reporting, enhancing the supply of Korea Treasury Bonds ("KTBs") and Monetary Stabilization Bonds ("MSBs"), and more broadly to improve the investment environment for foreign investors.
Key points of the Amendment are as follows:
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Shift to post‑issuance reporting for Korean Won linked foreign currency securities issued by non‑residents
Previously, non‑resident issuers of Korean Won linked foreign currency securities — i.e., foreign‑currency denominated securities whose reference currency or settlement currency is Korean Won — were required to file a prior report with MOFE for any issuance of such securities exceeding USD 100,000.
The Amendment replaces the prior‑reporting requirement with a post‑issuance reporting system. Non‑resident issuers may now report to MOFE within three months of the issuance date for issuances up to USD 50,000,000. This easing of the reporting burden is expected to facilitate fundraising and enable more agile investment decisions by non‑residents.
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Korean institutional investors permitted to trade KTBs and MSBs via ICSDs
Under the previous rules, only non‑resident investors could trade KTBs and MSBs offshore through International Central Securities Depositories (ICSDs)¬–participation by Korean financial institutions was restricted. With Korea’s anticipated inclusion in the World Government Bond Index (WGBI) in April 2026, foreign demand for Korean government bonds is expected to increase. To address settlement challenges arising from time‑zone differences and to relieve constraints on the supply of bonds to foreign investors, the Amendment allows Korean institutional investors (including financial institutions) to open ICSD accounts and trade KTBs and MSBs through those accounts. It also provides a legal basis requiring ICSDs to report the trading and holding details of Korean institutional investors, ensuring consistency with reporting standards applied to foreign investors.
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Enabling margin transfers for non‑cleared OTC derivatives via investment‑only accounts
Previously, investment‑only accounts held by foreign investors could not be used to deposit or transfer funds for margin exchanges related to non‑cleared over‑the‑counter (OTC) derivative transactions. The Amendment permits such deposits and transfers in investment‑only accounts, enabling foreign investors to post and receive margin and undertake related activities for non‑cleared OTC derivative transactions, thereby improving transactional convenience.
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Elimination of per‑transaction limits on outsourced payment services by NongHyup and Suhyup banks for non‑residents and foreign residents
Prior to the Amendment, when NongHyup Bank and Suhyup Bank outsourced certain payment‑related processes to credit cooperatives, transactions involving non‑residents or foreign residents were limited to USD 5,000 per transaction and USD 50,000 annually per person.
The Amendment removes the per transaction limit while retaining the USD 50,000 annual cap, thereby expanding the range of payment and receipt services that may be outsourced for non-residents and foreign residents.
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[Korean Version]
