FSS: Overseas Listed Stocks Received as Compensation Must Be Traded Through Domestic Securities Firms

The Financial Supervisory Service (FSS) announced on the 19th that consumers should be cautious as violations of the Foreign Exchange Transactions Act may result in sanctions when trading overseas-listed stocks acquired through stock compensation plans.

The stock compensation plan refers to a system where a company grants stock exercise rights in the form of stock options or restricted stock units (RSUs) to employees upon achieving certain targets.

The FSS warned that domestic employees who trade overseas-listed stocks granted to them through overseas securities firms or other foreign investment brokers, or deposit funds in foreign financial institutions, may face sanctions for violating the Foreign Exchange Transactions Act and related laws.

Under the current Foreign Exchange Transactions Act and Capital Markets Act, trading of overseas-listed stocks must be conducted through domestic securities firms or investment brokers. Additionally, if trading funds are deposited in foreign financial institutions, prior notification of overseas deposits must be made to foreign exchange banks such as domestic banks.

Violations of the Foreign Exchange Transactions Act may result in administrative penalties such as fines or warnings depending on the amount involved. However, if the violation is voluntarily reported to the FSS through a foreign exchange bank, the fine may be reduced by 50%.

To avoid such disadvantages, overseas-listed stocks should be deposited with domestic investment brokers before trading. The FSS emphasized that domestic employees of global companies who receive overseas-listed stocks through stock compensation plans and trade them via foreign investment brokers are highly likely to violate regulations and should exercise caution.

An FSS official stated, "Domestic securities firms provide services for entrusted trading of overseas stocks," adding, "When trading overseas-listed stocks allocated under stock compensation plans, applying for the transfer of overseas-listed stocks to a domestic investment broker and depositing them into one's own account before trading can prevent disadvantages."

This content was produced with the assistance of AI translation services.