Transcript PowerPoint 프레젠테이션

KSD’s Global Custody Services
Hae-Il Jang
Managing Director
Korea Securities Depository
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
KSD Overview
※ Participants of KSD
Central Securities Depository of
Korea
700
Founded in 1974 under the
Commercial Code and transformed
in 1994 under the Securities &
Exchange Act
600
59 shareholders including KRX,
securities companies, banks, etc
and 1,067 participants including
securities companies, banks,
insurance companies, etc. (Dec. 31,
2010)
Supervised by Ministry of Strategy
& Finance, Financial Services
Commission (FSC), and Financial
Supervisory Service (FSS)
500
57%
69%
61%
55%
45%
52%
48%
43%
400
39%
300
31%
200
100
0
2006
2007
2008
2009
2010
No. & ratio of Domestic Participants
No. & ratio of Foreign Participants
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
KSD Overview
Core Infrastructure of the Capital Market
Deposit &
Settlement
Services
Primary
Market
Services
• Securities Deposit
Asset
Management
Support
Derivatives
Market
Services
International
Deposit &
Settlement
• Global Custody
• Securities Settlement
• Entitlements Processing
Service
• Transfer Agent
Services
• Bond Registration
Service
• SLB Intermediary
• FundNet Service
• Repo Services
(deposit, establishment,
• Secured Call
redemption, settlement)
Management
• Fund Servicing
(calculate, disclose NAV)
Low Cost ㆍHigh Efficiency
Korea Securities Depository
• Collateral Management
• Local Custody
Service
• KDR Depositary
• Custody for ADR
underlying shares
for OTC transaction
Global Standard
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
KSD’s global services
One Single Gateway for Global Investment
Korean
Companies
Custodian for ADR(GDR)
Underlying Shares
Overseas
Market
Korean
국내증권시장
Market
KDR Depositary
Foreign
Companies
Secondary
Market
Korea Securities Depository
Korean
Investors
Global Custody Service
Korean
국내증권시장
Market
Local Custody Service
Primary
Market
Overseas
국내증권시장
Market
Foreign
Investors
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Cross-border Securities Settlement Channel
6 Models for Cross-border Securities Settlement by BIS
Global
Custodian
Local Agent
Direct
Access
ICSD
6 Models for
Cross-border
Securities
Settlement
CSD Linkage
Multi CSD
Model
These models vary by “legislation structure”, “market practices for investment”
and “openness for foreign financial organization”
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Global custody service for domestic investors
Unique model that CSD provides global custody service by expanding the scope
of its eligible securities from domestic securities to global securities
- cross-border custody, settlement and corporate action services over the 36 markets of
34 countries with 4 custodians for overseas investment by domestic investors
Europe
ICSDs
Euroclear
※KSD’s Custodian Austria
Denmark Clearstream
Euroclear
Finland
Clearstream
France
Germany
Citibank
Greece
Africa &
SSB
Ireland
Mid East
Italy
United Arab
Netherlands
Emirates
Norway
South Africa
Portugal
Spain
Switzerland
United Kingdom
Belgium
Israel
Sweden
Korea Securities Depository
Asia
Australia
China(Shanghai)
China(Shenzen)
Hong Kong
Indonesia
Japan
New Zealand
Philippines
Singapore
Thailand
Taiwan
Vietnam
Americas
Argentina
Canada
Chile
Mexico
United States
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Global custody service for domestic investors
※ Cross-border settlement volume
(Bil., USD)
14.0
12.5
144,797
12
12.0
9.7
10.0
8.5
97,283
8.0
140,000
118,674
89,722
80,000
6.0
4.9
60,000
4.0
40,000
32,341
2.0
12,699
120,000
100,000
6
5.9
160,000
20,000
18,800
0.0
0
2004
2005
2006
2007
2008
Settlement Amount (Bil, USD)
Korea Securities Depository
2009
2010
Number of Settlements
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
STP in KSD's global custody service
STP launched to reduce operational risks and inefficiency by automatic
transformation (March 2006)
Before STP
After STP
Low efficiency, High risk
High efficiency, Low risk
Clients 
SAFE
KSD
 Custodian
Terminal
Manual operation for data
transformation
Korea Securities Depository
Clients 
SAFE
KSD
 Custodian
SWIFT
STP : Automatic transformation from
original message into SWIFT message ⇒
No manual operations
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Disintermediation - Local custody service
KSD’s custody service (1998)
- custodian services: securities and cash account opening and management, settlement and
balance report, etc.
- standing proxy services: exercise of voting right and dividend distribution, reports to the
regulator, investment registration to FSS, etc.
Unique model that CSD
functions as a local custodian by
DISINTERMEDIATION to crossborder investment
Foreign Investor
Global Custodian
DISINTERMEDIATION
by KSD’s
local custody service
- Direct access to CSD
- Custody a/c as
a participant’s a/c
and legal ledger
Korea Securities Depository
Multi-tier
structure
for foreign
investors
Local Custodian
KSD
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Disintermediation - Local custody service
Prerequisite conditions for custody
service by CSD
- stipulation by laws or decrees for
cross-border securities deposit and
settlement business by account opening
with foreign CSDs or foreign institutional
organizations
Weakness of KSD’s custody service
- non-commercial banking institution (cash
management or FX not available
directly)
Advantages of KSD’s custody service
- direct access to CSD, custody a/c as a
participant’s a/c and legal ledger
- precise corporate actions by CSD
- stable and firm legal basis as CSD
- reasonable fee
<Market share of local custody service>
Samsung Se
2.7%
KSD 1.9%
Others 7.9%
HSBC 36.0%
- no global network
DB 3.0%
Overcoming the weakness:
- alliance with commercial bank for cash
management and FX
Korea Securities Depository
Citi 23.1%
SCB 25.4%
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
CSD Linkage
Base of CSD linkage – Local custody service
Co-listing of Korean securities on Tokyo Stock Exchange
- Kodex200 ETF co-listed on KRX and TSE in November, 2007
- arbitrage trading between Korea and Japan
- STP through SWIFT for migration (1 BUSINESS DAY)
KSD-JASDEC linkage Model
Selling Broker
Japan
 Selling
’ Buying
TSE
Buying Broker
 Data of trading
 Application for listing
JASDEC
Selling broker
Korea
Issuer
 Notification of
deposit (Migration)
 Stocks issuing & deposit
(through brokers)
Korea Securities Depository
Buying broker
KSD
Custody
agreement
JASDEC A/C
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Custody service for ADR∙GDR underlying shares
KSD’s Custody Service for Domestic Companies issuing ADR∙GDR(1994)
- For domestic companies that issue ADR
or GDR
※ Total custody share
Citibank,
81.1%
- Custody agreement
 Bank of New York
 Citibank N.A.
 Deutsche Bank Trust Company
 JP Morgan Chase
- Korean companies’ ADR & GDR: 45 issues
for 39 companies
BNY, 4%
- Market share of KSD in Korea: 100%
JPMC,
14.8%
Korea Securities Depository
DBTC,
0.01%
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Custody service for ADR∙GDR underlying shares
Advantages using KSD custody
services for ADR∙GDR underlying
shares
- book-entry issuance of DR underlying
shares
- direct participation in central deposit
system
- STP through SWIFT for DR conversion
※ ADR∙GDR conversion and release
(Mil. Shares)
5,000
250
4,500
4,000
200
3,500
3,000
150
2,500
2,000
100
1,500
and release(1~2 business days)
- corporate actions such as rights
exercising, tax withholding, etc. through
SWIFT
1,000
50
500
0
0
2004
2005
2006
2007
2008
2009
2010
Conversion, case
Release, case
Conversion, No. of Shares(Mil. Shares)
Release, No. of Shares(Mil. Shares)
1~2 business days for DR conversion
and release
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
KDR Depositary for foreign companies
Centralized securities depository and settlement system of Korea
☞ authorized to issue KDR pursuant to the Financial Investment Service and Capital
Market Act of Korea and its Enforcement Decree
※ KSD’s functions at primary market
CSD
 CSD: securities deposit and
settlement
 Transfer Agent for issuance
of foreign shares
KSD
Transfer
Agent
Korea Securities Depository
 Depositary for KDR issuance
KDR
Depositary
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
KDR Depositary for foreign companies
Current foreign candidates for KRX listing
- mostly Chinese and Japanese companies
- Cayman holding companies which have subsidiaries in mainland China
- U.S, Germany, Canadian companies also considering listing to Korean market
※ Foreign Companies’ Listing to Korean Market(2010)
Companies
Establish
ment
Issuing
country
Foreign listing
Migration
Listing type
Listing
schedule
3NOD Digital
Cayman
Korea
Non-listing
X
Share
Aug. 2007
Huafeng Group
Holdings
Cayman
Hong Kong
Hong Kong
O
KDR
Nov. 2007
Cowell E Holdings
Cayman
Korea
Non-listing
X
Share
Feb. 2008
16 more
companies
Japan
Hong Kong
Cayman
Korea
Japan
Non-listing
O
X
Share or KDR
-
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
KDR Depositary for foreign companies
※ KDR Issuance Structure
Overseas
Korea
Securities Report
FSS
Underwriting Agreement
Issuing Co.
Issuance of Underlying
Shares
Custodian
Listing
Application
Deposit Agreement
Custody
Agreement
Korea Securities Depository
Subscription
Handling Co.
Lead Manager
KRX
Issuance of
KDR
Notification of
Listing
KSD
KDR
Depositary
(Primary Market)
KDR
Distribution
Investors
CSD
(Secondary
Market)
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Expandability of CSD's role in global market
Unique global custody model by expanding its role from domestic securities to
global securities, overcoming the limits of a traditional CSD
Possibility and expandability of local custody service by CSD, implementing
Disintermediation
Fast and efficient CSD linkage model for the migration between the markets in
the case of co-listed companies in the form of shares
Depositary role of CSD in issuing DRs in domestic market as well as 4 major
Depositary banks
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Annex 1. KSD SLB System
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Annex 2. KSD Tri-Party Repo Service
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Annex 3. KSD FundNet Service
The first case in the world a CSD established STP for the entire back-office operations of the asset
management market
Globalization of Fund Services
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Annex 4. Global ETF Market Trend
Global ETFs Market
(Million USD)
Korean ETFs Market
(#)
(Billion Won)
(#)
2000
5000
100000
120
1600
4000
80000
100
1200
3000
60000
80
60
800
2000
40000
40
400
1000
0
0
`98 `99 `00 `01 `02 `03 `04 `05 `06 `07 `08 `09 `10 `11.6
20000
20
0
0
`02
`03
`04
`05
`06
`07
`08
`09
`10
`11.7
Global ETF market has grown steadily since its introduction as an alternative
investment instrument in 1990, and Korean ETF market has also grown
accordingly
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.
Thank You
Korea Securities Depository
We bridge Asia and the rest of the world as Global Partner with
internationally compatible investment services.