(1) Reasons for Proposal
This proposal aims to enact the Enforcement Decree of the Financial Benchmarks Management Act to prescribe matters delegated to Presidential Decrees under the proposal to enact the Financial Benchmarks Management Act (Act No. 16650, promulgated on Nov. 26, 2019, to enter into force on Nov. 27, 2020) and other matters necessary for enforcement of the Act.
(2) Major Provisions
A. Designation and Revocation of Critical Benchmarks (Article 3)
The Financial Services Commission may hear from experts to efficiently deliberate on the designation or revocation of critical benchmarks.
B. Designation of Institutions for Computation of Critical Benchmarks (Article 4)
Documents to be prepared and submitted to be designated as an institution for computation of critical benchmarks shall be prescribed.
C. Computation Work Regulations (Article 5)
Detailed matters regarding (1) Method and procedure for computation of critical benchmarks, (2) explanation of critical benchmarks, (3) conflict of interests management and internal controls, (4) criteria and procedure to be followed by institutions submitting basic data and management and supervision of basic data submissions, (5) method and procedure to be followed when entrusting computation work, etc., to be included in computation work regulations shall be prescribed.
D. Critical Benchmarks Management Committee (Article 6, Article 7)
1) The Critical Benchmarks Management Committee shall include two (2) or more independent, outside members without a conflict of interest in computation of critical benchmarks, and the majority of members shall be those without any conflicts of interest.
2) The Critical Benchmarks Management Committee shall deliberate matters regarding (1) securing the independence of the Committee, (2) criteria and procedures for appointment and dismissal within the Committee, (3) periodic inspection of the appropriateness of regulations on computation work, etc.
E. Public Notice of Computation Work Regulations and Conflict of Interests (Article 8)
Institutions for computation of critical benchmarks shall provide public notice on the organization of the Critical Benchmarks Management Committee, methods and procedures for computation of critical benchmarks, explanations on critical benchmarks, etc., through their internet homepages, etc.
F. Inspection of the Appropriateness of Computation Work Regulations (Article 9)
Institutions for computation of critical benchmarks shall inspect the following when inspecting the appropriateness of computation work regulations to enable critical benchmarks to retain their validity and credibility: (1) regulations on and procedures for internal review and approval of computation methods, (2) organization for internal review and approval in computation institutions, (3) role of persons in charge of review and approval of computation methods, etc.
G. Recordkeeping and Management of Data (Article 12)
1) Institutions for submission of basic data shall keep record of and preserve the following data for five (5) or more years: (1) major changes in procedure or method for submission of basic data, (2) data and evidentiary materials submitted to institutions for computation of critical benchmarks, (3) personal data, qualifications, and roles of persons in charge of submitting evidentiary materials and basic data, etc.
2) Institutions for computation of critical benchmarks shall prepare and preserve records of the following data for five (5) or more years: (1) data used in computation of critical benchmarks such as basic data, etc., (2) personal data, qualifications, and roles of persons in charge of computing critical benchmarks, (3) results of computation of critical benchmarks, etc.
3) Institutions using critical benchmarks shall prepare and preserve records of the following data for five (5) or more years: (1) financial transaction statistics using critical benchmarks, (2) explanations on and records of the issuance of critical benchmarks in accordance with Article 9 (1) of the Act, and (3) financial contracts including emergency plans in accordance with Article 9 (2) of the Act.
H. Suspension of Critical Benchmarks Computation Work (Article 13)
The Financial Services Commission may, when institutions for computation of critical benchmarks face difficulties in performing computation of critical benchmarks: (1) consider supplementary benchmarks capable of substituting critical benchmarks, (2) notify institutions using critical benchmarks on matters regarding suspension, and (3) take other measures for the protection of financial consumers and security of financial markets as prescribed and publicly notified by the Financial Services Commission.
I. Authority to Issue Orders to Take Measures (Article 14)
The Financial Services Commission may, in cases where it has been recognized that there is cause for concern that the validity and credibility of critical benchmarks may be harmed, order institutions for submission of basic data, etc., to take measures regarding: (1) maintenance of or amendment to critical benchmark computation work regulations for improving validity or credibility of critical benchmarks, (2) submission of basic data or qualifications of persons in charge of computing critical benchmarks, (3) entrustment of critical benchmark computation work, (4) criteria and procedures to be followed by institutions for submission of basic data and management and supervision of submission work, etc.
J. Entrustment of Work (Article 17)
To enable efficient performance of job duties by the Financial Services Commission, (1) deliberations regarding whether institutions for computation of critical benchmarks are in compliance with the necessary qualifications for designation, (2) deliberations regarding the appropriateness of the computation work regulations, and (3) receipt of reports from foreign computation institutions, etc., shall be entrusted to the Financial Supervisory Service.
