South Korea plans to make it easier for foreign investors to trade local stocks as the country seeks the status of a developed nation in MSCI Inc.’s equity indexes.
The Financial Services Commission will introduce a single, so-called “omnibus account” for foreigners trading local stocks, the regulator said in a statement. The change will bring to an end an unpopular rule that currently requires offshore money managers to buy or sell shares through a separate account for each of their funds.
The simplified identification system is meant to remove one of the two main hurdles in the path of South Korea’s inclusion in the developed-nation share gauges. When South Korea was taken off MSCI’s shortlist of candidates for the status in 2014, the index provider also cited the absence of improvement in won trading hours as a reason. Recognition as a developed nation is coveted as it could open the door to a larger pool of global funds and potentially lower volatility associated with emerging-market assets.
“The omnibus account will resolve most of the inconveniences that foreign investors experienced so far under the current identification system,” Kim Young Sung, analyst at Daewoo Securities Co., said by phone. “I think they made one step further” towards inclusion of the nation’s stocks in the MSCI developed-market indexes, Kim said.