South Korea’s financial regulator said on June 25 it will ease rules for brokerage houses, in a move that could help the sector channel more funds into industrial sectors.
Under the deregulatory move, a family-run business conglomerate, or chaebol, can have two brokerages under its wing, according to the Financial Services Commission.
Currently, a chaebol is allowed to have only one brokerage unit under its wing.
The FSC said it will also eliminate barriers for new players to set up brokerages.
When brokerages want to expand their businesses, they are required to get approval from the FSC, but the deregulatory move will allow brokerages to expand businesses by notifying the FSC of them.
At the end of last month, the number of brokerages in Korea stood at 56. Only six new brokerages have been set up since 2010.
Hwang Sae-woon, a researcher at the Korea Capital Market Institute, said the move is expected to bring a significant change in the brokerage industry.
“If entry barriers to brokerages are lowered, more new players will make inroads into the sector, and it will give the industry a competitive edge,” Hwang said.
By Ram Garikipati and newswires (email@example.com)