South Korea plans to tighten liquidity regulation standards for securities firms

Gold Financial News reports that on May 18th, the Korean Financial Commission and the Financial Supervisory Service announced that Korea plans to tighten liquidity regulation standards for domestic securities firms.
Regulatory authorities will extend liquidity ratio regulation rules to cover all domestic brokerages, whereas previously the policy only applied to some institutions.
Regulatory agencies will optimize liquidity ratio calculation methods, apply discount coefficients to assets, and include contingent liabilities such as debt guarantees to improve crisis response capabilities.
Korea will increase the net capital ratio risk weight for real estate-related exposures and set an overall investment limit.
For brokerages with higher systemic importance, specialized capital regulation rules will also be introduced.
The regulatory agencies stated that during the 2022 debt crisis at Lotte World, many brokerages faced actual financing difficulties, yet their reported liquidity ratios remained above 100%.
Currently, the Korean Financial Commission and the Financial Supervisory Service are refining regulatory rules to prevent liquidity risks.

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