BusinessWeek – Some participants in South Korea’s nascent alternative-investment market have grown pessimistic over the ability of incoming legislation to support the development of an onshore hedge funds industry.

The Capital Markets Consolidation Act will become effective in February. It is a sweeping attempt to give Korea a securities law akin to those in the United Kingdom or Australia, in which financial services are regulated by function rather than by business license, and in which most types of businesses will be thrown open to all kinds of financial institutions. It will allow the development of a universal bank and plenty of cross-selling.

As part of this, the Financial Supervisory Service has been keen to encourage the development of an onshore hedge funds industry. There are a growing number of Korea-focused hedge funds, but nearly all of them operate offshore, in Singapore, Hong Kong or the United States. The government wants to position Seoul as a financial hub for northeast Asia, and has seen how hedge funds have become a vital and welcome part of the milieu in places like Singapore.

Read Complete Article

Tags: business-license, cross-selling, financial-supervisory-service, hell, investment-group, investment-opportunities, law-expert, macdonald, market-consolidation, memorandum, mr-nixon, new-york-mercantile, northeast-asia, partnerships, ploy, savings-and-loan-crisis, south-east-asia, universal-bank

Digital Chosunilbo – Many companies who bought forex hedge funds are on the verge of going bankrupt as a result of the plunging won. Many who bought Knock-In Knock-out (KIKO) option trading, which protects customers’ money when the exchange rate fluctuates within a certain range, have suffered losses of several billion won after the Korean currency plunged beyond the range.

According to the Financial Supervisory Service, there are 519 companies on KIKO trading as of the first half of this year, and their total losses amount to W1.478 trillion (US$1 = W1,119). “As the won dropped further in recent days, it generated an additional loss of some W400 billion. The total loss this year will tally up to W2 trillion at this point,” said Kang Nam-hoon, head of the external cooperation affairs division at the Korean Federation of Small and Medium Businesses, on Wednesday.

Read Complete Article

Tags: fourth-quarter, hell, international-investment-bank, rubs, third-party, trillion