Emerging Markets Rates and Currencies Handbook

Required documents include: - Declaration of Deposit (or Trust) Transactions (Form No.7 - 1), Corporate Registration Certificate and any documents that can prove the exception cases for cases where the resident (other than institutional investors) conducts any deposit or trust transactions with foreign financial institutions. - Any documents that can explain the route of acquisition (Declaration of Currency or Monetary Instruments (Form No.6-1, or any contracts or agreements) and Certificate of Receipt (Form No.4-3) for all other cases. - Declaration of Deposit (or Trust) Transactions (Form No.7-1) for cases where the resident conducts trust transactions with non-resident in a foreign country. License Requirements None. Requirements to open a foreign currency account A business certificate and UBO (Ultimate Beneficiary Owner) is required for KYC. There is no restriction on opening foreign currency accounts in Korea. The local currency can be directly credited into foreign currency accounts by FX via Citi- Direct. Deal Management Rollover: Permitted — net settlement. Unwinding: Permitted — net settlement. Early Maturity: Permitted — The deal is simply amended to be settled at the historical rate, plus/minus swap points. The new maturity date should be within spot date. Documentation Requirements For FX Spot transactions, underlying documents are required not at the time of FX conversion but at time of wiring FCY overseas. Forward and swap transactions are subject to the Financial Investment Services and Capital Markets Act (FSCMA) and Financial Consumer Protection Act (FCPA). Under these laws and regulations, all the clients are to be categorized into two groups; Professional Financial Consumers and General Financial Consumers. Professional Financial Consumers are: a. Government institutions, financial institutions. b. Corporate clients listed in the stock market (need to submit professional investor registration form to Citi). c. Corporate clients whose financial investment product transactions amount to over KRW 10 bn (or KRW 5 bn in case of corporate clients subject to external audit) (Both need to register as a professional investor at the Korea Financial Investment Association). Documentation requirements for Professional Financial Consumers (b. & c.): 1. Letter of confirmation for FX derivatives transaction. 2. Supporting documents to prove underlying exposures. 3. Application for change to Professional Financial Consumer. 4. Registration certificate for professional investor (c.). General Financial Consumers are: Any corporate client other than Professional Financial Consumers. Documentation requirements for General Financial Consumers: 1. Investor information sheet for OTC derivatives. 2. Hedging purpose confirmation. 3. Investor category assessment report. 4. Supporting documents to prove underlying exposures. 5. Core product information summary + Product description sheet. Foreign participants can buy KRW without an underlying securities transaction in spot transactions, and the resulting KRW can be held at the investor’s exclusive cash account within the FX bank. Trade Flows Documentary evidence required for trade transactions. Capital Flow and FDI For capital transfers, a foreign investor should transfer capital funds through the FX bank. The FX bank should verify the receipt of capital funds from an investor and issue a Certificate of Purchased Foreign Currency after the FX transaction.