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S.Korea to allow securities firms to offer foreign currency credit

Xinhua, March 30, 2015 Adjust font size:

South Korea's financial ministry said Monday that it will allow large securities firms to offer foreign currency credit to market players to help diversify brokerage operations.

The Ministry of Strategy and Finance will allow brokerages with an equity capital of 1 trillion won (900 million U.S. dollars) to offer credit line in foreign currency, including foreign currency loans, from March 31.

"Under the capital market act, securities firms are now permitted to provide credit in the local currency, but not in foreign currency. There has been demand existing for long for an expanded credit line in the foreign currency," an official at the finance ministry said by phone.

Under the revised foreign exchange act, brokerages will be required to report only foreign borrowing worth more than 50 billion U.S. dollars to the finance ministry, having an identical requirement with banks.

To prevent reckless credit line in foreign currency, securities firms will be required to report their monthly lending and borrowing in foreign currency every month to the central bank and financial watchdog. Endi