Financial Services Commission Implements 'Unified Report Regulation Flexibility' Measures to Stabilize Bond Market

[Asia Economy Reporter Sim Nayoung] The Financial Services Commission and the Financial Supervisory Service announced on the 28th that they have decided to implement a temporary relaxation of regulations related to the blanket registration statement to allow banks to flexibly adjust the issuance volume of bank bonds in order to stabilize the bond market.

Amid the recent contraction of the corporate bond market, concerns have been raised that a crowding-out effect is occurring, where general corporate bonds are being neglected due to the issuance volume of bank bonds.

Banks issue bank bonds by pre-reporting the planned issuance amount for a certain period in bulk, in accordance with the Capital Markets Act.

The blanket registration statement system allows issuers who frequently issue securities to pre-report the total amount of securities to be offered over a certain period (2 months to 2 years) in bulk.

Reductions in the planned issuance amount on the blanket registration statement are only permitted within a 20% limit, so even if banks want to adjust the planned issuance amount to respond to increased market uncertainty or to stabilize the bond market, this regulation acts as a constraint.

A Financial Services Commission official stated, "In a situation where the bond market is rapidly fluctuating, if a bank does not issue bank bonds according to the planned issuance amount on the blanket registration statement submitted under the Capital Markets Act for 'bond market stabilization,' sanctions will be exempted," adding, "This measure applies to bank bonds scheduled to be issued by December 31 of this year under the already submitted blanket registration statements."

He continued, "In a situation where the bond market is rapidly fluctuating, it is expected that forcing bond issuance to comply with the planned issuance amount on the blanket registration statement could exacerbate potential bond market instability factors such as crowding out corporate bonds, so this measure will help mitigate such risks."

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