Foreign Investors to Trade Korean Stocks Without Local Accounts as Account Regulations Ease
Foreign investors will soon be able to trade Korean stocks without opening local accounts. In a move to enhance accessibility for non-resident investors, South Korea’s financial authorities have designated a new foreign omnibus account system as an innovative financial service under the regulatory sandbox program.
On April 2, the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) announced that overseas securities firms will be allowed to open omnibus accounts for their clients even if they do not have a branch or subsidiary in Korea. Previously, such accounts could only be opened by foreign affiliates or major shareholders of domestic financial investment companies.
The foreign omnibus account system, introduced in 2017, allows global securities firms to represent multiple individual investors by opening a single account with a Korean securities company. This enables foreign investors to place orders through their local brokers without opening accounts in Korea.
Despite its introduction, the system saw little uptake due to strict eligibility criteria and regulatory burdens. These included requirements for overseas firms to be affiliated with domestic financial companies and the obligation to report final investor details immediately after settlement. In response, the FSC revised the system in 2023 to allow for monthly post-trade reporting.
With the latest measures, the eligibility criteria for account opening have been further eased. To address concerns over verifying the beneficial owners of accounts from firms without a Korean presence, the authorities will require detailed contractual provisions between domestic and overseas brokers to ensure regulatory oversight.
The FSS plans to collaborate with the Korea Financial Investment Association (KOFIA) to issue operational guidelines and a Q&A document for Korean brokerages offering omnibus account services. These will cover reporting systems, know-your-customer (KYC) obligations, and operational procedures.
The authorities will conduct a pilot operation of the designated sandbox service to evaluate its effectiveness and determine if further refinements are necessary. They expect the improved accessibility to encourage greater foreign capital inflows and contribute to the advancement of the Korean capital market.
