The Financial Supervisory Service and the securities industry will improve the calculation standards for the rate of return on investors' deposits. The aim is to improve fairness by banning differentiation among investors and establishing standards for calculating foreign-currency deposit rates.
The Financial Supervisory Service said on the 29th that, together with the Korea Financial Investment Association, it will move to revise the "best-practice standards for calculating deposit usage rates."
The FSS previously established best-practice standards in 2023, set the cost allocation method and calculation cycle related to deposit usage rates, and last year improved the disclosure system for deposit usage rates. As of the end of Jun., the average disclosed usage rate of securities firms was 1.31%, up 0.85 percentage points from the end of 2022, showing the effects of the system improvement. In particular, the gap between the disclosed usage rate and the base rate narrowed from 2.79 percentage points at the end of 2022 to 1.19 percentage points as of the end of Jun.
However, some shortcomings remain, such as applying differentiated usage rates among investors or including expenses unrelated to deposits in the standards for calculating deposit expenses. The FSS and the Korea Financial Investment Association plan to resolve these issues through this revision of the standards and ensure that deposit usage rates are calculated reasonably and fairly.
First, it will in principle ban applying different deposit usage rates among investors such as individuals and institutions without reasonable grounds. When applying a negotiated usage rate to institutional investors, firms may not use investor deposit placement revenue as a funding source and must cover it solely with the securities firm's own resources.
Fees related to promotional events and the amounts of property benefits offered to investors, which had been included in the standards for calculating deposit usage rates, will also be excluded.
The foreign-currency deposit system will also be improved. As of the end of last year, 50 out of 53 securities firms did not pay usage rates on foreign-currency deposits. Accordingly, through this revision of the standards, authorities will establish calculation criteria and payment procedures for deposit usage rates by currency and improve the process to determine the usage rates. The disclosure system that allows comparisons of usage rates by securities firm will also include foreign-currency usage rates to enable comparisons.
The FSS said, "We expect that, through this system improvement, investors will be able to receive reasonable and fair deposit usage fees," adding, "We plan to complete the revision with a target of full implementation in Jan. next year."