A Story on Capital Market
Consolidation Act

On July 3, the plenary session of the National Assembly passed the bill for the Capital Market Consolidation Act with 176 legislators approving the bill and 14 against and 23 abstaining.
The new law is designed to reshape the capital market and upgrade it by a step. Chairman Hwang Kun-ho of the Korea Securities Dealers Association said a plantation built in a blue sea in the enactment of the new capital market law, while some said a big bang has hit the finance industry.
The new capital market law will allow the simultaneous management of all financial businesses in the industry by an owner or a single company including securities deals, asset management, futures trade, and investment consultancy and expanded the handling of financial products, while the segregation of the financial business sectors will be changed to be based on function, rather than business category. As a result, the industry would see the birth of such financial behemoth as Goldman Sachs, an investment bank that has been engaged in all kinds of financial transactions around the world.
The new law will also allow all securities firms to be able to handle cash remittances by individuals, credit card operation, and payment of public charges through their accounts, reversing the plan to have only securities financial firms to participate in the joint settlement network along with banks.
The public would now be able to enjoy a wide choice of upgraded financial services. The Bank of Korea will be entrusted with the supervisory rights for the securities firms so that they can only settle small cash payments by individuals.
The new capital market law has been in the works for a long time. In 2003, the government announced the legislation of a new capital market law and proposed to integrate the related laws first. In 2004, the bill was turned over to the parliament following four public hearings on the bill in 2006.
I as chairman of the Finance and Economy Committee of the National Assembly, listened to various opinions expressed on the new law at a public hearing staged by the Korea Exchange in Busan in March and studied reports by leading financial and securities research organizations including the Korea Securities Research Institute and the Korea Financial Research Institute on reactions on the new law by the respective industries. In addition, the committee held two hearings on the new law to listen to opinions of professional financial experts.
In the process, the payment settlement system had been a major conflicting issue between the financial and securities industries and the committee recommended to the Ministry of Finance and Economy and the Bank of Korea to work things out, which they did to pave the way for the new law.
The bill for the new law required the deliberation by the Legal Affairs Committee also just like any new bills passed by N.A. committees before they are submitted on the floor for approval by the plenary session of the National Assembly. The new law is made of 580 pages with 449 principle articles, requiring a speedy deliberation of the legal affairs committee for it to meet the deadline as the plenary sessions were to be held on July 2 and 3 only. At last, the bill was approved on July 3.
The new capital market law will be put into force in 2009 after a year and half of preparation period.
I as the chair of the committee, which acted as the midwife for the new law, sincerely wish that it will go along way in further upgrading the capital market and make a strong foundation for Korea on its way to be an advanced country. nw

By Rep. Chung Ui-hwa
Chairman,
The Finance and Economy Committee,
The National Assembly