Financial Services Commission to Normalize Securities Firms' Call Loan Regulations Next Month

[Image source=Yonhap News]

[Asia Economy Reporter Park Jihwan] Financial authorities have decided to normalize the securities firms' call borrowing regulations, which were temporarily relaxed last March to resolve liquidity shortages at securities firms.

On the 28th, the Financial Services Commission announced at the Financial Risk Response Team meeting held at the Bankers' Hall in Jung-gu, Seoul, that "the limits on securities firms' call borrowing and asset management companies' call loans will be restored to previous levels starting in August."

In April, the Financial Services Commission temporarily expanded the monthly average limit on securities firms' call borrowing from 15% to 30% of their equity capital. After assessing that market conditions had somewhat stabilized, the call borrowing limits were partially lowered to 25% in May and 20% in June. From August, the limit will revert to 15% of equity capital. The call loan limit for asset management companies will also be restored to 2% of total assets starting in August.

Sohn Byungdoo, Vice Chairman of the Financial Services Commission, stated, "The regulation on cash assets held by sellers of repurchase agreements (RP), which was temporarily eased for the month of July, will also be normalized starting in August."

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