1. Reasons for Amendment
The Amendment clarifies general principles regarding soundness in business management for asset management companies and supplements a number of provisions following the enforcement of MMF market price assessment (April 1, 2023).
2. Major Provisions
A. Introduce standards on soundness in business management for asset management companies (Article 3-24-3)
- Prescribe in the subordinate regulation (Financial Investment Business Regulations) standards for maintaining soundness in business management for asset management companies in accordance with the Financial Investment Services and Capital Markets Act (Article 31 (1))
B. Prescribe compulsory establishment of dedicated online funds (Article 7-24 (4))
- “Administrative Guidance on the Online Sale and Establishment of Public Offering Funds” (enforced as of July 2017) has been enforced to reduce investor costs and increase choice.
- The Amendment clearly stipulates the administrative guidance that has been enforced.
C. Streamline assessment methods to reflect the operating structure (direct and indirect) of exchange equalization fund MMFs (Article 7-36)
- Unlike other investment pools for public funds, MMFs where an exchange equalization fund is the sole investor (exchange equalization fund MMFs) engage in direct investment and indirect investment (fund of funds) simultaneously to ensure confidentiality of investments.
- The enforcement of market price assessment for corporate MMFs (as of April 1, 2023) means that in order for the accounts of an exchange equalization fund MMF to maintain their ratings, 30% of total investments (direct + indirect investments) inevitably must be held in the form of stable assets.
- Streamline provisions to allow the direct investments of an exchange equalization fund MMF to be regarded as a separate MMF and assessed in the same manner as other investment pools for public funds that are fully operated as funds of funds.
