Since the current Financial Investment Services and Capital Markets Act directly specifies the subjects and methods of regulation for financial investment entities' device for suspending information exchange (hereinafter referred to as "Chinese Wall"), it has been pointed out that the current Act undermines the dynamism and business vitality of financial investment services. Therefore, the amendment aims to improve the regulation of Chinese Wall in a way that the Act only sets out the basic principles for suspending information exchange and the details are autonomously designed and operated by each company’s Chinese Wall regulation.
Also, to enhance the autonomy of financial investment entities involved in business entrustment, this amendment expands the scope of work that financial investment entities are able to entrust to third parties and, in principle, allows re-entrustment with the consent of the trustor to induce specialization of financial investment entities.
In addition, since it is difficult to promote business promptly due to the prior reporting obligation for concurrently-run and incidental business and since the prior reporting of a new incidental business is in fact similar to an approval system, an aspect of the current system acts as an obstacle to the timely performance of work. Therefore, while the principle of prior reporting on concurrently-run and incidental business is converted to post reporting, the amendment aims to improve after-sales supervision to prevent problems with investor protection.

Details

A. Convert the prior reporting obligation for concurrently-run and incidental business to post reporting, and in cases where a concurrently-run business impedes the managemental soundness of financial investment entities or impairs investor protection, establish grounds for the Financial Services Commission to limit or correct the operation of the concurrently-run business (Articles 40 and 41)
B. Expand the scope of work that financial investment entities are able to entrust to third parties and also expand the scope of application of employers’ responsibilities under the Civil Act to re-entrustment to clarify the legal relationship between a trustor, re-trustor, and final trustee (Article 42 (1), (5), and (9))
C. Convert the Chinese Wall regulation from the regulation by “financial investment business unit” to one by “information unit,” which requires the suspension of information exchange to prevent conflicts of interest, and impose on financial investment entities the obligation to properly suspend information exchange in accordance with internal control standards (Article 45)
D. Prohibit the use of for its own behalf or allowing a third party to use the information that is subject to the suspension of information exchange without justifiable reasons (Article 54 (2) newly inserted)
E. Provide grounds for imposing on a financial investment entity, its employees, and those who receive and use the information penalty surcharge within 1.5 times the profits earned from transactions related to the violation or losses avoided where anyone uses or allows a third party to use of information that is subject to the suspension of information exchange without justifiable reasons (Article 428 (4) newly inserted)

Financial investment business entity engaging in other financial business (Article 40), suspending exchanges of information (Article 45), prohibition on the use of job-related information (Article 54), and penalty surcharge for financial investment entities (Article 428)