REGULATION

ON

SUPERVISION OF FUTURES BUSINESS

Regulation on Supervision of Futures Business

CONTENTS

I.	General Provisions

§1.	Purpose

§2.	Application

I-2.	Authorization and License

Section 1. General Provisions

§2-2.	Definitions

§2-3.	Matters Concerning Application for Licensing of Futures Business

§2-4.	Matters Concerning Application for Licensing of Establishment of Branches or Other Offices of Foreign Futures Firms

Section 2. Procedures

§2-5.	Procedural Flow of Authorization or License

§2-6.	Introduction to Procedures for Authorization or License

§2-7.	Receipt of Application for Preliminary Authorization or License

§2-8.	Public Announcement on Fact of Application and Laying of Opinions

§2-9.	Review of Preliminary Authorization and License

§2-10.	Omission of Preliminary Authorization and License

§2-11.	Receipt of Application for Authorization and License

§2-12.	Authorization and License

§2-13.	Supplementation of Data

Section 3. Reviewing Standards

§2-14.	Reviewing Standards of Principal Investors

§2-15.	Reviewing Standards in Granting Authorization for Merger or Assignment and Assumption of Business

II.	Accounting

§3.	Application Standards

§4.	Separate Accounting

§5.	Financial Statements

§6.	Business Documents

§7.	Filing of Business Reports BB

§8.	[Deleted]

§9.	Guidelines for Account Settlement

§10.	[Deleted]

III.	Financial Soundness

Section 1. General Provisions

§11.	Definitions

§12.	Standards of Application

§13.	Valuation of Securities

§14.	Maintenance of Adjusted Net Capital Ratio

Section 2. Maintenance of Financial Soundness

Subsection 1. Report on Adjusted Net Capital Ratio

§15.	Periodic Report on Adjusted Net Capital Ratio

§16.	Non-periodic Report

Subsection 2. Calculation of Adjusted Net Capital

§17.	Calculation of Adjusted Net Capital

§18.	Deductible Items

§19.	Adding Items

§20.	Subordinated Borrowings

Subsection 3. Calculation of Gross Risk Amount

§21.	Gross Risk Amount

§22.	Market Risk Amount

§23.	Counter party Risk Amount

§24.	Fundamental Risk Amount

§25.	Credit Concentration Risk Amount

§26.	Offset Risk Amount

Subsection 4. Ratio of Asset to Liabilities

§27.	Method of Valuating Assets and Liabilities and Report

Subsection 5. Prompt Corrective Action

§28.	Management Improvement Recommendation

§29.	Management Improvement Request

§30.	Management Improvement Order

§31.	Postponement of Prompt Corrective Action

§32.	Submission and Evaluation of Management Improvement Plan

§33.	Implementation Period of Management Improvement Plan

§34.	Report on Implementation of Management Improvement Plan and Request for Correction

§35.	Measures for Nonperformance of Management Improvement Plan

§36.	Emergency Measures

Section 3. Restrictions on Individual Asset Management and Internal Control of Financial Risks

§37.	Restriction on Ownership of Securities Issued by Principal Investors

§38.	Prohibition of Liability Guarantee

§39.	Prohibition of Credit Extensions

§40.	Internal Control Standards

§41.	Keeping Records on Off-the-Balance Sheet Transactions

Section 4. Management Disclosure

§42.	Management Disclosure

III-2.	Supervision of Foreign Exchange Soundness

Section 1. General Provisions

§42-2.	Definitions of Terms

Section 2. Registration of Foreign Exchange Business Handling Futures Firm

§42-3.	Requirements for Registration

§42-4.	Alteration of Registration

Section 3. Management of Foreign Exchange Soundness

§42-5.	Foreign Exchange Liquidity Ratio

§42-6.	Internal Management of Foreign Exchange Futures Firms

Section 4. Sanctions against Violations of the Supervision on Foreign Exchange Soundness

§42-7.	Sanctions for Failure to Achieve Foreign Currency Liquidity

§42-8.	Status Report on Sanctions

Section 5. Foreign Exchange-Related Report

§42-9.	Reporting

IV.	Entrustment Business of Futures Firms

Section 1. General Provisions

§43.	Definitions of Terms

§44.	Mutatis Mutandis Application of Brokerage Contract Rules

§45.	[Deleted]

Section 2. Establishment of Futures and Options Trading Account

§46.	Delivery of Risk Disclosure Statement

§47.	Conclusion of Contract for Establishing Futures and Options Trading Account

§48.	Establishment of Futures and Options Trading Account for Non-Members of Futures Exchange

Section 3. Processing Orders

§49.	Notification of Results of Executed Transactions

§50.	Notification of Monthly Trading Record

§51.	Exception to Notify Customers

§52.	Duty to Notify Transaction Errors in Processing Customer's Orders

Section 4. Management of Customer's Property

§53.	Prohibition of Receiving Entrustment of Customer's Property at the Time of Mediation

§54.	Issuance of Evidence for Entrusted Property

§55.	Management Principle of Entrusted Property

§56.	Separate Custody of Customers' Deposits

§57.	Checking of Separate Custody Status of Customer's Deposits and Withdrawal Thereof

§58.	Management of Customer's Deposits by Depository Institutions

§59.	Management of Non-Monetary Entrusted Property

§59-2.	Deposition of Securities

§60.	Transfer of Customers' Futures and Options Trading Account

§61.	Handling Problems in Case of Nonpayment of Customer Margin or Settlement Money

Section 5. Trading on the Company's Own Account

§62.	Keeping Records on Orders and Execution of Trading

§63.	[Deleted]

V.	Overseas Futures and Options Trading

§64.	Definitions of Terms and Application

§65.	Risk Disclosure Statement for Overseas Futures and Options Trading

§66.	Separate Management by Account

§67.	Designation of Foreign Exchange Bank Account

§68.	Overseas Trading with Credit

§69.	Confirmation Letter for Funds Related to Overseas Futures and Option Trading

§70.	Deadline for Depositing Customer Margin or Settlement Money

VI.	Reporting, Delegation and Commission of Powers

§71.	Reporting

§72.	Publication of Information on Futures Firms

§73.	Power of Emergency Measures by the Chairman of the FSC

§74.	Administration of Delinquents

§75.	Delegation and Commission of Powers

§76.	Duty to Observe Secrecy

VII.	Supplementary Provisions

§77.	Demand to Submit Data

§78.	Business Assistance

§79.	Detailed Provisions

Addenda

Enacted on April 22, 1999

Amended on December 29, 2000. FSC2000-125

Amended on January 29, 2001. FSC 2001-2

Amended on May 3, 2001. FSC 2001-25

Amended on July 3, 2001. FSC 2001-42

Amended on October 4, 2001. FSC 2001-73

Amended on December 19 2001. FSC 2001-108

Amended on May 1, 2002. FSC 2002-25

CHAPTER I.

GENERAL PROVISIONS

§1. Purpose

The purpose of this Regulation shall be to stipulate the matters necessary for performing the duties under the jurisdiction of the FSC as provided in the Futures Trading Act (hereinafter, "the Act"), the Enforcement Decree of the Act (hereinafter, "the Decree"), the Enforcement Regulation of the Act, the Act on Establishment of Financial Supervisory Organizations (hereinafter, "Supervision Act"), the Enforcement Decree of the Supervision Act, the Act on Structural improvement or Financial Industry (hereinafter, "financial Restructuring Act"), the Enforcement Decree of the Financial Restructuring Act, the Foreign Exchange Transaction Act, the Enforcement Decree of the Foreign Exchange Transaction Act, and other relevant statutes. <Amended December 29, 2000>

§2. Application

(1) The provisions of Chapters II, III and III-2, except the cases otherwise stipulated in this Regulation, shall not apply to any foreign exchange bank recognized as a futures company pursuant to Article 4 paragraph (1) of the Act (Law No, 5041) (hereinafter, "foreign exchange bank") and any person engaging in futures business under the financial institutions established under other laws. <Amended December 29, 2000>

(2) The provisions of Sections 1 through 3 of Chapter III shall not apply to any business office of a foreign corporation, among futures trading brokers regarded as a futures company pursuant to Article 4 paragraph (2) of the Act (Law No. 5041), when such foreign corporation has filed with the Governor a copy of the report on financial soundness which had been filed with the supervisory authority of its home country. <Amended December 29, 2000>

CHAPTER I-2.

AUTHORIZATION AND LICENSE

Section 1.

General Provisions

§2-2. Definitions <Amended December 29, 2000>

(1) The term "preliminary authorization or license" used in this Chapter refers to an intention preliminarily expressed for a prior review of the matters subject to authorization or license and for securing the surety in execution thereof before granting authorization or license, and which has no effect of an authorization or license.

(2) The terms not defined in this Chapter shall have the same meanings defined in other relevant statutes.

(3) In applying the requirements for principal investors provided in the annexed table pursuant to Article 10 paragraph (4) of the Decree to the persons having a special relationship with the largest shareholders such requirements shall apply to any shareholder who is a person having a special relationship therewith and a person who exerts de facto influences on the major managerial matters of the company concerned, such as appointment and dismissal of officers even though such person is not a shareholder. <Amended December 29, 2000>

§2-3. Matters Concerning Application for Licensing of Futures Business <Amended December 29, 2000>

"Other documents to be determined by the FSC" stipulated under Article 9 paragraph (1) subparagraph 7 of the Decree shall be as follows.

1. The balance sheet as of the application date;

2. A copy of the minutes of the inaugural shareholders' meeting;

3. A copy of the minutes of the board of directors' meeting (or the minutes of the promoters' meeting) with respect to the application for license;

4. Certificate of payment of capital stock;

5. Joint venture agreement and authorization for investment by foreigners; and

6. Other documents needed for confirming the requirements for principal investors (confirmation documents, certifying documents,)

§2-4. Matters Concerning Application for License to Establish Branches or Other Offices of Foreign Futures Firms <Amended December 29, 2000>

Any foreign futures firm intending to establish its branch or office in Korea shall submit the following documents together with an application for

license:

1. Documents describing the business of its head office;

2. Documents describing the method of conducting the business to be permitted;

3. Personal information of the representative of the branch (business place) and documents certifying such information;

4. Certificate of purchased foreign exchange;

5. Documents certifying the holding of property in Korea; and

6. Other documents needed in confirming the requirements for principal investors (confirmation documents, certifying documents,)

Section 2.

Procedures

§2-5. Procedural Flow of Authorization or License <Amended December 29, 2000>

The procedures for authorization or license shall be classified into a preliminary authorization or license and an authorization or license, which are shown in the annexed Table 1.

§2-6. Introductions to Procedures for Authorization or License

With regard to the questions about the procedures for authorization or license, reviewing criteria, application documents, etc, raised by a person or his agent intending to obtain authorization or license (hereinafter, "applicant"), the Governor may answer such questions in writing, or have interviews or consultations with such applicant. <Amended December 29, 2000>

§2-7. Receipt of Application for Preliminary Authorization or License <Amended December 29, 2000>

Any applicant for preliminary authorization or license shall file with the FSC an application for preliminary authorization or license (including the documents to be attached) for each matter requiring such authorization or license, which are shown in the annexed Forms 2 through 5.

§2-8. Public Announcement on Fact of Application and Laying of Opinions <Amended December 29, 2000>

(1) The FSC shall, when receiving any application for preliminary authorization or license, publicly announce the application date, applicant, purpose and contents of application, method of and deadline for opinion presentation, etc, through a press release, internet home page, etc, to collect opinions from interested parties.

(2) The FSC may, when deemed necessary, request the relevant authorities and interested parties to present their opinions on the application for preliminary authorization or license, in addition to the public announcement pursuant to the provision under paragraph (1).

(3) The FSC shall, when any of the opinions collected pursuant to paragraphs (1) and (2) is judged disadvantageous to the applicant, notify the opinion to such applicant to give an opportunity to explain the reasons therefore by specifying a period.

(4) The FSC may, hold a public hearing when it is judged that any application may exert a significant influence on the financial market.

§2-9. Review of Preliminary Authorization and License <Amended December 29, 2000>

(1) The Governor shall confirm whether the application contents are true, and review whether such application contents satisfy the reviewing standards prescribed under the relevant statutes and section 3 of this Chapter in consideration of the opinions collected from interested parties, the general public, and the relevant authorities.

(2) The Governor may organize and operate an evaluation committee for the evaluation of issues concerning the feasibility of business plan,

(3) The Governor may conduct on-site investigation to confirm the application contents and conduct interviews with the promoters and management.

(4) The FSC shall determine whether to grant the preliminary authorization or license. In this case, Article 2-12 paragraphs (1) and (2) shall apply thereto.

§2-10. Omission of Preliminary Authorization and License <Amended December 29, 2000>

The FSC may omit the procedures for preliminary authorization or license when it judges that prompt handling of any application for authorization or license is necessary for the restructuring of financial industry, such as merger, conversion, or assignment or assumption of business and for the protection of customers, or that the requirements for authorization or license have been already satisfied at the time of application for preliminary authorization or license.

§2-11. Receipt of Application for Authorization and License <Amended December 29, 2000>

Any applicant shall, after fulfilling the contents and conditions under the preliminary authorization or license, file with the FSC an application for authorization or license (including the documents to be attached) for each business requiring authorization or license, which is provided in the annexed Forms 6 through 9.

§2-12. Authorization and License <Amended December 29, 2000>

(1) The FSC shall decide as to whether to grant authorization or license in accordance with the reviewing standards prescribed under the relevant Statutes and the provisions of Section 3 of this Chapter with respect to the application for authorization or license filed by an applicant, and when the FSC refuses to grant any authorization or license, it shall notify such applicant of the fact in writing.

(2) The FSC may grant authorization or license on any of the following conditions:

1. A condition that the largest shareholder of any futures company which has obtained the futures business license and any person having a special relationship therewith are required to maintain and not to transfer their respective holding equity for three years from the date of license, excepts the case falling under any of the following.

a. Increase of capital stock or assignment or assumption of issued stocks which does not bring about any change in the status of the largest shareholder;

b. Performance of duties by law; and

c. Other cases where the FSC admits the appropriateness of transfer or assignment of the status or share of the largest shareholder.

2. A condition that any person who assumes or acquires 10/100 or more of the outstanding voting stocks within three years from the date of license should satisfy the requirements for principal shareholders.

3. A condition that is deemed necessary for the purport of the statutes governing the authorization and license, the protection of customers, and the maintenance of sound order in the financial industry.

(3) The Governor may conduct on-site inspections to confirm whether the contents and conditions under the preliminary authorization or license are fulfilled.

(4) Any applicant shall commence the authorized or permitted business within six months from the date of authorization or license. However, this provision shall not apply to the case where the FSC has otherwise determined such period or approved the extension of such period.

§2-13. Supplementation of Data <Amended December 29, 2000>

(1) The Governor may, when he needs any supplementary document or additional data for the review of preliminary authorization and license or of authorization and license, request the applicant concerned to file such documents or data by specifying a deadline.

(2) The Governor shall, when there is any condition attached at the time of granting the preliminary authorization and license or the authorization and license, confirm the status on the fulfillment of such condition.

Section 3.

Reviewing Standards

§2-14. Reviewing Standards of Principal Investors <Amended December 29, 2000>

(1) The qualification of principal investors stipulated under Article 10 paragraph (4) of the Decree are the same as provided in the annexed Table 1.

(2) In case any criminal proceedings and investigation against any principal shareholder are under way by the Public Prosecutions Administration, the Fair Trade Commission, the National Tax Service, the FSS and when it is deemed that any suspected fact may significantly affect the review for authorization or license, the FSS may waive such review until such suspected fact is cleared.

§2-15. Reviewing Standards in Granting Authorization for Merger or Assignment and Assumption of Business <Amended December 29, 2000>

(1) "The standards to be determined by the FSC" prescribed under Article 4 paragraph (3) subparagraph 5 of the Financial Restructuring Act as reviewing standards in granting authorization for merger of futures firms shall be as follows:

1. A corporation to be survived or newly established after merger should satisfy the license standards of futures business. However, this provision shall not apply to the case of merger between futures firms;

2. In case a corporation to be survived or newly established after merger engages in any business other than futures business, there should be no conflict of interest between such business and futures business;

3. A plan to settle existing claims and obligations should be reasonable and feasible;

4. Such merger should not hinder the sound credit order and efficiency in futures industry;

5. Such merger should not be contrary to the protection of customers; and

6. Such merger should not virtually restrict the competition among futures firms.

(2) The reviewing standards in granting authorization for merger under paragraph (1) shall apply mutatis mutandis to the reviewing standards in granting authorization for assignment and assumption of business to futures firms.

CHAPTER II.

ACCOUNTING

§3. Application Standards

(1) With respect to accounting treatment by futures business companies, the matters not stipulated under this Regulation shall comply with the Financial Accounting Standards. <Amended December 29, 2000>

(2) The fiscal year of every futures company shall be from April 1 to March 31 of the following year. <Amended December 29, 2000>

§4. Separate Accounting

(1) Every futures company shall separate customers' property and its own property in accounting transactions. <Amended December 29, 2000>

(2) Every futures company shall keep its head office accounts and its branch office accounts separately in order to clearly present the operating performance of each operating unit. <Amended December 29, 2000>

§5. Financial Statements

(1) The financial statements shall be prepared in report form, and presented along with those of the immediately preceding fiscal year for comparative purpose.

(2) Standard forms of a balance sheet and income statement among financial statements, bookkeeping of each account title, and accounting standards for foreign currency accounts consigned under the Securities and Exchange Act shall be determined by the Governor.

(3) Any account title in the financial statements shall not be newly established or amended without the approval of the Governor

§6. Business Documents

(1) Every futures firm shall, in accordance with Article 46 of the Act, prepare and keep the following documents (hereinafter, "books'), However, keeping of books may be omitted as stipulated by the Governor. In this case, the futures firm shall be ready to promptly provide substitute books with the same contents, when requested by an authorized person or organization such as the Governor: <Amended December 29, 2000>

1. Accounting books:

a. A daily trial balance;

b. A cash and deposit books; and

c. A general ledger and subsidiary ledger,

2. Business books :

a. A transaction ledger for each customer;

b. A register of deposited substitute securities;

c. A register of external accounts;

d. A proprietary trade ledger,

e. A register of daily settlement of accounts;

f. A register of cash received;

g. Logging sheets of computer terminals;

h. An entry book of check numbers;

i. A transaction journal.

(2) The items required to be entered in each of the books under paragraph (1) shall be determined by the Governor.

(3) Books shall be kept for ten years from the end of the fiscal year concerned.

§7. Filing of Business Reports

(1) Every futures company shall, in accordance with Article 47 of the Act, file with the Governor the following business reports for the fiscal year within three months after the fiscal year concerned ends: <Amended December 29, 2000>

1. Business report; and

2. Financial statements and supplementary schedules.

(2) The matters to be entered in the business report under paragraph (1) subparagraph 1 shall be determined by the Governor.

(3) [Deleted on December 29, 2000].

§8. [Deleted on December 29, 2000]

§9. Guidelines for Account Settlement

The Governor may stipulate or issue the guidelines necessary for account settlement in order that futures business companies may accumulate sufficient internal reserves and proper accounting treatments at the fiscal year-end can be done. <Amended December 29, 2000>

§10. [Deleted on December 29, 2000]

CHAPTER III.

FINANCIAL SOUNDNESS

Section 1.

General Provisions

§11. Definitions

The terms used in this Chapter shall be defined as follows, and those not defined herein shall have the same meanings given to them in the relevant statutes;

1. The term "derivatives contract" refers to any of the following

a. Futures contract;

b. Forward contract;

c. Option contract;

d. Swap contract;

e. Contracts similar to those under items 1a through 1d (including those interlinked with each other; the same hereinafter);

f. Contracts which interlink the contracts under items 1a through 1e with other transactions.

2. The term "futures contract" refers to any of the following :

a. Contracts on the trades under Article 3 subparagraph 1 items a and b of the Act (including the stock index futures trading executed on the KSE; the same hereinafter);

b. Contracts on the trades which are prescribed under Article 3 subparagraph 1 items a and b of the Act and executed on overseas futures markets.

3. The term "forward contract" refers to any contract which is similar to the futures contract and executed on the markets other than futures markets (including the KSE market; the same hereinafter in this Chapter) and overseas futures markets.

4. The term "option contract" refers to any of the following:

a. Contracts on the trades under Article 3 subparagraph 1 item c of the Act (including the stock index options trading conducted in the KSE; the same hereinafter in this Chapter);

b. Contracts on the trades which are prescribed under Article 3 subparagraph 1 item c of the Act and executed on overseas futures markets;

c. Contracts on the trades which are similar to those under item 4a or 4b and executed on the markets other than futures markets or overseas futures markets.

5. The term "swap contract" refers to any contract under which the concerned parties exchange the cash flow arising from the relation between agreed-upon claims and liabilities, or receive or give the consideration corresponding thereto and which does not fall under a futures contract, forward contract, or option contract.

6. The term "OTC derivatives contract" refers to any contract which is concluded on the markets other than futures markets or overseas futures markets among derivatives contracts.

7. The term "underlying asset" refers to any asset which is subject to trading of derivatives, from among commodity products, financial products, or indexes prescribed under Article 2 of the Act.

7-2. The term "adjusted net capital ratio" refers to the capital adequacy ratio stipulated under Article 10-3 paragraph (1) of the Decree, <Amended December 29, 2000>

8. The term "securities" refers to any of the following, and whose value varies accordance with the change of market situation or creditability of issuers:

a. Derivatives contract;

b. Securities;

c. Certificates or investment products corresponding to item 8a or 8b;

d. Commodity products.

9. The term "marketable securities" refers to any of the following :

a. Derivatives contracts (excluding those that can be cashed within three months among OTC derivatives contracts);

b. Securities with interest, such as bonds, negotiable certificate of deposits, commercial papers, banker's acceptances (excluding those the principal and interest payment on which is suspended);

c. Stock certificates or depository receipts (DRs) publicly offered on the domestic or overseas markets (excluding those whose transaction has been suspended for more than one month due to default of the issuing company);

d. Beneficiary certificates which are publicly offered or listed, or can be cashed through resale or rescission within three months;

e. Stocks issued by securities investment companies, which are publicly offered or listed, or can be cashed within three months;

f. Subscription warrants and securities with warrants whose underlying assets are publicly offered or listed, or those having similar nature thereto; and

g. Other financial products and commodity products which can be cashed within three months.

10. The term "collateral" refers to any of the following property, which is offered by the counter party to transaction or a third party so as to secure the fulfillment of liabilities and on which there is no significant restriction for a futures company to promptly recover the losses incurred from non-fulfillment of liabilities: <Amended December 29, 2000>

a. Marketable securities, (excluding the securities issued by any counter party to transaction or person having a special relationship therewith);

b. Monetary claims (excluding the claims on a counter party to transaction or persons having special relationship therewith).

11. The term "party having a special relationship" refers to a party falling under any of the following subparagraphs. However, banking institutions under the Banking Act, or banks under the special laws, securities companies under the Securities and Exchange Act, and insurers under the Insurance Business Act shall not be deemed the parties having a special relationship: <Amended December 29, 2000>

a. Executives of the futures firm concerned; <Amended December 29, 2000>

b. Principal investors of the futures firm concerned;

c. Affiliates prescribed under the Act on Monopoly Regulation and Fair Trade; and

d. In the case of an individual who is an executive a principal shareholder, such individual's spouse or paternal or maternal relatives by blood within the third degree.

12. The term "claims, on the person having a special relationship" refers to any claim for money or securities on the person having a special relationship and securities (excluding beneficiary certificates) issued by the person having a special relationship and owned by the futures firm. However, in case the claims fall under any of the following subparagraphs, they shall not be deemed as claims, etc, to the person having a special relationship: <Amended December 29, 2000>

a. Cases where financial institutions such as banks provide liability guarantee;

b. Cases where collateral, such as the money or marketable securities owned or issued by persons other than the person having a special relationship, is sufficiently offered.

13. The term "subsidiary" refers to a company whose issued voting shares (including equity share having voting rights) are owned by any futures company as the case falling under any of the following: <Amended December 29, 2000>

a. Case where such company owns shares in excess of 50/100 of the outstanding voting shares;

b. Case where such company owns shares in excess of 30/100 of the outstanding voting shares and becomes the largest shareholder provided in subparagraph 15;

c. Case where any company falling under item 13a or 13b jointly own shares in excess of 30/100 of the outstanding voting shares and becomes the largest shareholder provided in subparagraph 15. <Amended December 29, 2000>

14. The term "liability guarantee" refers to, regardless of its title, the guarantee, endorsement, furnishing of collateral, assumption of obligation, letter of commitment, or others similar thereto, which are made to either directly or indirectly, so as to secure the fulfillment of a third party's liabilities;

15. The term "equity investment" refers to an acquisition of a corporation's equity by any futures company for the purpose of controlling or participating in the management. In case such company acquires the shares neither publicly offered nor distributed on the secondary market, or the shares of its subsidiaries, or becomes, through such acquisition, the largest owner of the company's voting shares (hereinafter, "the largest shareholder") together with any persons having a special relationship, such acquisition shall be deemed equity investment. <Amended December 29, 2000>

§12. Standards of Application

(1) The provisions of this Chapter shall apply to the financial statements of a futures firm that is not consolidated with its subsidiaries. <Amended December 29, 2000>

(2) The amount stated in each account title which can be a basis in applying the provisions of this Chapters shall be recorded in book value in the financial statements (hereinafter, "audited financial statements") prepared by a futures firm pursuant to the provisions of ChapterⅡ (in case the financial statements are inconsistent with the audited financial statements as a result of audit by CPAs, such audited financial statements). <Amended December 29, 2000>

(3) Every futures firm shall prepare financial statements with the settlement date set at the end of each quarter so as to ascertain the amount in each account title on the financial statements necessary for calculating the adjusted net capital ratio as of the end of each quarter. <Amended December 29, 2000>

(4) In applying the provisions of this Chapter to securities trust, money trust for specified purposes, and other trust actually managed in a futures company's own judgment, it shall be deemed that such futures firm directly owns the management objects of such trusts. <Amended December 29, 2000>

§13. Valuation of Securities

In applying the provisions of this Chapters in the valuation of securities shall be made in accordance with the standards provided in the annexed Table 2, and when there are no valuation standards therein, it shall be made on the basis of fair price. <Amended December 29, 2000>

§14. Maintenance of Adjusted Net Capital Ratio

Every futures firm shall maintain its adjusted net capital ratio under Article 15 at the level of 100/100 or more <Amended December 29, 2000>

Section 2.

Maintenance of Financial Soundness

Subsection 1.

Report on Adjusted Net Capital Ratio

§15. Periodic Report on Adjusted Net Capital Ratio

(1) Every futures firm shall prepare a report on adjusted net capital ratio (referring to the percentage ratio of net capital under Article 17 to gross risk amount provided in Article 21; the same hereinafter) as of the end of each quarter (hereinafter, "report on adjusted net capital ratio") and file the report with the Governor within one month from the end of the each quarter. <Amended December 29, 2000>

(2) Every futures firm shall file with the Governor a report on adjusted net capital ratio prepared in accordance with the audited financial statements within three months after the end of its fiscal year and in case the contents of such report differ from those of the report on adjusted net capital ratio prepared as of the end of its fiscal year and filed by any futures company pursuant to the provisions under paragraph (1), it shall file such report together with the data specifying the details of difference and causes thereof. <Amended December 29, 2000>

(3) The reporting form of the adjusted net capital ratio under paragraph (1) shall be determined by the Governor.

§16. Non-periodic Report

(1) Every futures firm shall calculate its adjusted net capital ratio on the basis of closing time of daily business, and it shall report to the Governor the fact within six business days in the case where its adjusted net capital ratio decreases to or is likely to decrease to less than 150/100; within three business days in the case where such ratio decreases to or is likely to decrease to less than 120/100 and within two business days in the case where such ratio decreases to or is likely to decrease to less than 100/100. <Amended December 29, 2000>

(2) Any futures firm whose adjusted net capital ratio has decreased to less than 150/100 shall, in the case where its adjusted net capital decreases by 10/100 or more compared with the end of the latest month, report the details of decrease to the Governor within three business days. <Amended December 29, 2000>

Subsection 2.

Calculation of Adjusted Net Capital

§17. Calculation of Adjusted Net Capital

The adjusted net capital shall be an amount calculated by the following formula Adjusted net capital = the amount after deducting the total liabilities from the total assets in the balance sheet as of the base date (hereinafter, "net property") - the sum of deducting items + the sum of adding items.

§18. Deductible Items

(1) The deductible items under Article 17 shaft be as follows:

1. Advance payments, prepaid expenses, and prepaid income tax. <Amended December 29, 2000>

2. Fixed assets;

3. Claims on the persons having a special relationship;

4. An amount obtained by multiplying the losses of subsidiaries (in the case where the total liabilities exceed the total assets in the balance sheet as of the end of the latest settlement period or as of the end of a half-year settlement period, referring to the excess amount; the same hereinafter) by the futures firm's shareholding ratio; <Amended December 29, 2000>

5. Gains on valuation of non-marketable contracts among OTC derivatives contracts;

6. Loss resulting from the market price valuation of the marketable securities which are net reflected in the net property;

7. Overseas claims (referring to its own property or customers' property directly deposited with overseas institutions in its name, loans to persons who do not reside in Korea, amount receivables and securities receivables therefrom, and other claims corresponding thereto) held by domestic branches and business offices of a foreign corporation which has obtained the license for the futures business in Korea pursuant to Article 37 paragraph (3) of the Act. However, this provision shall not apply to the balance in the omnibus account for which an agreement has already been made pursuant to Article 56 paragraph (3) from among the properties deposited with overseas institutions for its customers' overseas futures trading; and <Amended December 29, 2000>

8. Account receivable from customers (based on the amount before deducting allowances for bad debts).

(2) In case the assets under paragraph (1) subparagraph 1, 2 and 8 fall under any of the following the amount equivalent thereto shall be excluded from the deducting items:

1. Marketable securities from among the investment securities owned for the purpose other than that of equity investment;

2. Bank deposits which can be liquidated within three months through the rescission of contract;

3. Assets which can be offset against liabilities or which are accumulated for the redemption of liabilities.

4. Assets deposited outside for contingent liabilities or settlement guarantee;

5. Accrued interest on advance payments arising from the purchase of the securities with interest such as bonds;

6. Assets which have already been liquidated or can be liquidated; and

7. In case collateral is furnished, an amount, whichever is smaller, between the price of such collateral (referring to an amount obtained by deducting the market risk amount provided in Article 22 from the market price of collateral; the same hereinafter) and the price of the assets concerned.

(3) "Assets which have already been liquidated or can be liquidated" under paragraph (2) subparagraph 6 shall be as follows:

1. The price of real estate falling under any of the following within the limit not exceeding 30/100 of its book value:

a. In case such real estate is leased, the deposit for lease or amount of the leasehold right creation;

b. Amount equivalent to the fixed liabilities with a maturity exceeding one year which is borrowed by furnishing such real estate as collateral; and

c. Amount equivalent to 70/100 of the value of such real estate appraised on the basis of the official land price notified by the Government or by a method similar thereto.

2. The security deposit for rent and the amount of leasehold rights (hereinafter, "security deposit,") in the following :

a. In case a lease agreement or a leasehold agreement is rescinded under such agreements within three months, the security deposit, which can be recovered ;

b. In case an agreement on the security deposit or leasehold deposit can be changed into a monthly rent agreement under a lease agreement or a leasehold agreement, the security deposit In this case, the deposit money for monthly rents shall be deducted from the security deposit,

§19. Adding Items

The adding items under Article 17 shall be as follows:

1. Allowance for bad debts accumu1ated in current assets;

2. Subordinated borrowings (including those through the issuance of bonds; the same hereinafter) ;

3. Obligation under financing lease (deducting the charges for agreement rescission); and

4. Other profits arising from the market price valuation of the securities which are not reflected in net property.

§20. Subordinated Borrowings

(1) The agreement on the subordinated borrowings to be added to the adjusted net capital pursuant to Article 19 subparagraph 2 shall include the following conditions and concerned parties shall place their names and seals or signatures thereon. However, even though such agreement satisfies the following conditions, the direct or indirect borrowings from other futures firms shall not be added thereto: <Amended December 29, 2000>

1. A condition that, when the company goes bankrupt, they shall be repayable only in case there is a remaining property after all other debts have been satisfied;

2. A condition that maturity of their principal shall be at least one year;

3. A condition that, even when the repayment date of their principal becomes due under the agreement, they shall not be repaid in the case where the adjusted net capital ratio decrease to 100/100 or less;

4. A condition that any agreement shall not be made on furnishing the collateral, offsetting, redemption prior to expiration, or liabilities guarantee which is likely to pervert the nature of subordinated borrowings;

5. A condition that there shall be no provision of, or request to provide, any direct or indirect consideration in exchange for the provision of subordinated borrowings;

6. A condition that the concerned parties shall not conclude or insist to conclude any supplementary contract without obtaining the prior approval of the Governor pursuant to the provision under paragraph (2);

7. A condition that in the case of a change in the contents of agreements under subparagraphs 1 through 6, prior approval shall be obtained from the Governor pursuant to the provision under paragraph (2), and if not, the original agreement shall be observed; and

8. A condition that when the Governor requests the correction of the practices violating the contents of the agreement under subparagraphs 1 through 7, the concerned parties shall promptly comply with such request.

(2) Any futures firm shall, when intending to first raise subordinated borrowings or change the contents of agreement thereinafter obtain the approval of the Governor. <Amended December 29, 2000>

(3) The total amount of the subordinated borrowings to be added to the adjusted net capital shall not exceed the amount equivalent to 100/100 of net property, However, this provision shall not apply to the case where the approval is obtained from the Governor.

Subsection 3.

Calculation of Gross Risk Amount

§21. Gross Risk Amount

A gross risk amount of any futures company shall be the amount obtained by deducting the amount of subparagraph 5 from the sum of the amount of subparagraphs 1 through 4: <Amended December 29, 2000>

1. Market risk amount;

2. Counter party risk amount;

3. Fundamental risk amount;

4. Credit concentration risk amount; and

5. Offset risk amounts

§22. Market Risk Amount

(1) The market risk amount under Article 21 subparagraph 1 refers to the amount of losses which any futures company may suffer from the adverse fluctuations in stock prices, interest rates, and exchange rates, and shall be the sum of the following amounts: <Amended December 29, 2000>

1. Risk amount associated with the fluctuation in securities prices; and

2. Risk amount associated with the fluctuation in exchange rate.

(2) The security price risk amount under paragraph (1) subparagraph 1 shall be as provided in the annexed Tab1e 3. <Amended December 29, 2000>

(3) The exchange rate risk amount under paragraph (1) subparagraph 2 shall be the amount obtained by multiplying the difference for each currency between the aggregate amount of long position of subparagraph 1 and that of short position of subparagraph 2 as of the base date by 5/100, However, the position whose exchange rate risk has been already calculated as security price fluctuation risk pursuant to the provision under paragraph (2) shall not be included in the calculation of the aggregate amount of long position of subparagraph 1 and the aggregate amount of short position of subparagraph 2:

1. Long position:

a. Monetary foreign currency assets: and

b. Estimated monetary foreign currency assets receivable under a derivative contract having a provision of receipt of monetary foreign currency assets short position:

2. Short position:

a. Foreign currency liabilities, and

b. Estimated monetary foreign currency assets receivable under a derivative contract having a provision of payment of monetary foreign currency assets.

§23. Counter party Risk Amount

(1) The counter party risk amount under Article 21 subparagraph 2 refers to an amount of tosses which a futures firm may suffer from the counterpart's nonperformance of redemption or settlement obligation to itself or a third party, and shall be the sum of the following amounts, However, in case any counter party or third party furnishes collateral, the value of collateral (referring to the amount obtained by deducting the market risk amount under Article 22 from the amount of collateral in market price) may be deducted from the amount of losses calculated for each transaction. <Amended December 29, 2000>

1. Unco1lectible risk amount;

2. Risk amount associated with the nonperformance of settlement of OTC derivative contracts; and

3. Risk amount associated with the nonperformance of settlement in the customers' accounts.

(2) The no collectable risk amount under paragraph (1) subparagraph 1 shall be calculated by multiplying the outstanding amount of claims, etc, (based on the total claims before deducting allowance for bad debts) by kind as of the base date by the relevant risk equivalent in such manner as provided in the annexed Table 4. <Amended December 29, 2000>

(3) The settlement nonperformance risk amount in OTC derivative contracts under paragraph (1) subparagraph 2 shall be calculated by multiplying the credit conversion amount for each OTC derivative contract calculated by the method selected by the company in such manner as provided in the annexed Table 5 by the relevant risk equivalent for each counter party provided in the annexed Table 6. <Amended December 29, 2000>

(4) The settlement nonperformance risk amount in customer accounts under paragraph (1) subparagraph 3 shall be the sum of the amounts by which an amount obtained by adding or subtracting the profit and loss of open interest of futures and options contracts to or from the balance of deposited property for each customer account (hereinafter, "balance of valuated deposited property") is less than the maintenance margin requirement.

§24. Fundamental Risk Amount

(1) Fundamental risk amount under Article 21 subparagraph 3 refers to an amount of losses which a futures firm may suffer from the scandals, errors, illegal or unfair business practices by its executives and employees, and other deterioration of business environment, and shall be the amount, whichever is larger, between the amounts in the following: <Amended December 29, 2000>

1. An amount equivalent to 2/100 of the valuated amount of customer's deposited property (referring to an amount obtained by adding or deducting settlement variation amount incurred from futures trading to or from the value of money, substitute securities, and other property deposited by a customer); however an amount equivalent to 4/100 of the maintenance margin requirement (in the case where such customer is a non-clearing member or special member of the Korea Futures Exchange, referring to the non-clearing member or special member's margin requirement as agreed with such non-clearing member) in the case of the transactions for the accounts of customers; and <Amended April 27, 2001>

2. An amount equivalent to 25/100 of the annual ordinary expenditures.

(2) The annual ordinary expenditure under paragraph (1) subparagraph 2 shall be the amount obtained by subtracting depreciation and bad debt expenses from the selling and administrative expenses, while in case the sum of interest expense exceeds that of interest income earned for one year preceding the month with the base date, such excess amount shall be the added thereto.

§25. Credit Concentration Risk Amount

(1) The credit concentration risk amount under Article 21 subparagraph 4 shall be the sum of amount calculated by the methods in the following. <Amended December 29, 2000>

1. In case any futures firm extends an amount of credit exceeding 25/100 of its adjusted net capital to a single borrower (exceeding the Government, local governments, and international organizations; the same hereinafter); (Total credit to a single borrower - 25/100 of adjusted net capital) / Total credit to a single borrower x Risk amount associated with the credit to a single borrower.

2. In case any futures firm owns or sells short 5/100 or more of the total stocks issued by a single borrower; (local stocks owned or sold short - 5/100 of total issued stocks) x Market price of such stocks x Risk equivalent of the relevant stock provided in annexed Table 3).

(2) The scope of the credit extended to a single borrower pursuant to the provision under paragraph (1) subparagraph 1 shall be that which falls under any of the following subparagraphs, but in case collateral is furnished, the value or collateral shall be deducted therefrom. However, in case a single borrower is a banking institution established under the Banking Act or a bank established under a special law, the following credits shall not be deemed extended to a single borrowers and in case such single borrower belongs to the same business group under Article 2 subparagraph 2 of the Act on Monopoly Regulation and Fair Trade, such business group shall be deemed a single borrower:

1. Monetary claims;

2. Securities undelivered at settlement date (valuated at market price);

3. Marketable securities issued by a single borrower (excluding stocks and those on which the principal and interest are guaranteed by financial institutions); and

4. Gains on valuation of the marketable contracts among OTC derivative contracts under which a single borrower is a counter party.

§26. Offset Risk Amount <Amended December 29, 2000>

(1) The offset risk amount under Article 21 subparagraph 5 refers to an amount by which the market price risk amount has been definitely decreased through a futures firm's short sales, hedging, arbitrage, and systematic risk management methods, and such decreased risk amount may be obtained by applying the methods of decreasing risks as provided in the provisions under paragraph (2) through (4). However, in this case, the following standards shall be satisfied, and also the materials explaining the details of positions, offsetting method shall be submitted :

1. The prices of the positions intended for offsetting risks should move in the opposite direction each other;

2. The risk offsetting effect arising from the combination of such positions shall not be extinguished within 15/100 from the closing price as of the base date.

(2) In case risks are offset by taking opposite positions (excluding the case of short position in options with out-of-the-money) between derivative contracts of the same series, between underlying assets of the same kind, between derivative contracts and underlying assets of the same instrument, or between futures contracts and options contracts with the same settlement month underlain by the same kind of assets, the market price risk amount shall be an absolute value of the difference (hereinafter, "general risk amount") between the risk amount in long position and the risk amount in short position. However, in the case of stocks, the market price risk amount shall be the amount obtained by adding 5/100 of the sum of long positions and short positions subject to the calculation of general risk amount to general risk amount.

(3) In case any futures firm operates a portfolio of stocks satisfying the requirements provided in subparagraph 1, the risks in such portfolio may be offset by the risks in stock index options:

1. The portfolio in which the risks can be offset by the risks in stock index options should meet the following requirements:

a. The number of component issues in such portfolio should be at least 20, and the total market va1ue of any individual issue included in the portfolio should not exceed 15/100 of the total market value of the portfolio;

b. At least 70/100 of the component issues in such portfolio should be the issues included in the index which is the underlying asset of stock index options; and

c. For the latest three months, the correlation between the daily fluctuation of such portfolio price and the daily fluctuation of the index, which is the underlying asset of the stock index options, should be high (Coefficient of determination (R↕) should be 0.90 or higher).

2. The method under paragraph (2) shall apply to the offsetting of risks between a portfolio of stocks and stock index options. However, in the case of stocks, the scope of offsetting shall not exceed 70/100.

(4) With regard to the same settlement month option contracts on the same instruments held by futures business companies, notwithstanding paragraph (2), mutual risks may be offset by the following method :

Option risk amount = [ (risk amount in long call options + risk amount in short put options) - (risk amount in short call options + risk amount in long put options) ]

(5) In the case where the Governor considers that the price risk amount will be definitely decreased through the objective data submitted by any futures firm, the risks in the position concerned may be offset.

Subsection 4.

Ratio of Asset to Liabilities

§27. Method of Valuating Assets and Liabilities and Report <Amended December 29, 2000>

(1) The assets and liabilities of every futures firm pursuant to Article 2 subparagraph 3 item a of the Financial Restructuring Act shall be valuated and calculated at real value.

(2) The scope of assets and liabilities and the method of calculating real value pursuant to the provisions under paragraph (1) shall be provided in the annexed table 7.

(3) Every futures company shall prepare a report on the ratio of assets to liabilities (referring to a percentage expression of the value obtained by dividing assets by liabilities after valuating assets and liabilities at real value, respectively; the same hereinafter) as of the end of each half year or fiscal year (hereinafter, "report on ratio of assets to liabilities") and file such report with the Governor within by the end of the following mouth.

(4) Every futures firm shall prepare a report on the ratio of assets to liabilities on the basis of the audited financial statements and file such report with the Governor within three months from the end of each fiscal years and in case the contents of such report differ from those of a report on the ratio of assets to liabilities prepared and filed as of the end of the fiscal year pursuant to paragraph (3), it shall attach thereto the data describing the details of difference and causes.

(5) The form of the reports on the ratio of assets to liabilities under paragraph (3) shall be determined by the Governor.

Subsection 5.

Prompt Corrective Action

§28. Management Improvement Recommendation

(1) The Governor shall, in case any futures company falls under any of the following subparagraphs, recommend such futures firm to take necessary measures: <Amended December 29, 2000>

1. Cases where its adjusted net capital ratio falls below 150%; or

2. Cases where it is deemed certain that the ratio will fall below the standard under subparagraph 1 due to occurrence of big financial scandal or bad credits. Necessary measures under paragraph (1) refer to any or whore of the following measures:

(2) Necessary measures under paragraph (1) refer to any or whole of the following measures:

1. Improvement of management of manpower and organization;

2. Curtailment of expenditures;

3. Efficient management of offices;

4. Disposition of non-performing assets;

5. Restriction on the practices causing any decrease in adjusted net capital

6. Restriction on entering into new businesses; and

7. Increase or reduction in capital stock.

(3) The practices causing any decrease in net capital under paragraph (2) subparagraph 5 refer to any or whole of the following practices: <Amended December 29, 2000>

1. Acquisition of real estate;

2. Occurrence of claims on a person having a special relationship;

3. Acquisition of the investment assets falling under deducting items;

4. Acquisition of treasury stocks;

5. Cash dividends;

6. Remittance of investment returns to the head office by the domestic branches or offices of a foreign futures firm and overseas deposits of securities thereby; and

7. Equity investment in other corporations.

§29. Management Improvement Requirement

(1) The FSC shall, in case any futures firm falls under any of the following subparagraphs, require such futures company to take necessary measures: <Amended December 29, 2000>

1. Cases where its adjusted net Capital ratio fal1s below 120%; of

2. Cases where it is deemed certain that the ratio will fall below the standard under subparagraph 1 due to the occurrence of big financial scandal or bad credits.

(2) Necessary measures under paragraph (1) refer to any or whole of the following measures: <Amended December 29, 2000>

1. Restriction on holding high risky assets and disposition assets;

2. Closure, consolidation, or restriction on opening of business offices;

3. Curtailment of organization;

4. Streamlining of subsidiaries;

5. Demand for change of executives;

6. Suspension of part of business;

7. Establishment of a plan for a merger or an acquisition by a third party, assignment of business in whole or in part, or incorporation in a financial holding company under the financial Holding Company Act (hereinafter, "financial holding company") as a subsidiary (including the incorporation as a subsidiary after establishing a financial holding company alone or jointly with any other financial institution; the same hereinafter); and

8. Measures under Article 28 paragraph (2)

§30. Management Improvement Order

(1) The FSC shall, in case any futures company falls under any of the following subparagraphs, order such futures company to take necessary measures. <Amended December 29, 2000>

1. Cases where its adjusted net capital ratio falls below 100%;

2. Cases of any ailing financial institution under Article 2 subparagraph 3 of the Financial Restructuring Act,

(2) Necessary measures under paragraph (1) refer to any or whole of the following measures: <Amended December 29, 2000>

1. Retirement of the stocks in part or in whole;

2. Suspension of business execution of executives and appointment of an administrator;

3. Merger, or incorporation as a subsidiary in a financial holding company;

4. Assignment of business in whole or in part;

5. Takeover of the concerned futures firm by a third party;

6. Suspension of business for up to six months;

7. Transfer of contracts in whole or in part; and

8. Measures under Article 29 paragraph (2).

(3) Of the measures under paragraph (2), suspension or assignment of business in whole, transfer of contracts in whole, and retirement of shares in whole shall be limited only to the case where any futures firm falls under any of the following cases: <Amended December 29, 2000>

1. Cases falling under the provision under paragraph (1) subparagraph 2; or

2. Cases where any futures firm falls under the provision under paragraph (1) subparagraph 1 and it is deemed that such futures firm may seriously harm the sound credit order or the right and interest of its customers.

§31. Postponement of Prompt Corrective Action <Amended December 29, 2000>

When the administrative authority concerned Judges that any futures firm falling under any subparagraph of Article 28 paragraph (1), Article 29 paragraph (1) or Article 30 paragraph (1) is certain or will be certain in a short period of time not to fall under such criteria through capital increase, sale of assets or that it has some reasons corresponding thereto, such authority may postpone to take action for a specified period.

§32. Submission and Evaluation of Management Improvement Plan <Amended December 29, 2000>

(1) Any futures firm which has received management improvement recommendation, requirement, or order pursuant to Article 28 to and Article 30 shall submit to the Governor a plan reflecting the contents of the action (hereinafter, "management Improvement plan") within two months after such action is taken.

(2) The decision as to whether to approve the management improvement plan submitted by a futures firm which has received the management improvement recommendation pursuant to Article 28 shall be made by the Governor; the decision as to whether to approve the management improvement plan submitted by a futures firm which has received the management improvement requirement or order pursuant to Article 29 to Article 30 shall be made by the FSC, within one month after such plan is received, respectively.

(3) For the issuance of a management improvement recommendation, requirement, or order pursuant to the provisions of Article 28 through Article 30, the Governor shall receive a review of the Management Assessment Committee comprised of outside professionals in advance prior to making an approval decision pursuant to the provisions under paragraph (2). This, however, shall not apply in the event of emergency or deliberation deemed unnecessary by the Governor.

(4) The Governor shall, when he deems that the management improvement plan submitted by a futures firm which has received the management improvement recommendation pursuant to Article 28 paragraph (1) is not be feasible, disapprove such plan, In this case, the FSC shall require such company to implement all or part of the measures under Article 29 paragraph (2).

(5) The FSC shall, when it deems that the management improvement plan submitted by a futures firm which has received the management improvement requirement pursuant to Article 29 paragraph (1) is not feasible, disapprove such plan, and require such company to implement all or part of the measures under Article 29 paragraph (2); and when it deems that the management improvement plan reflecting the contents of such requirement is not feasible, it shall disapprove such plan, and order such company to implement all or part of the measures under Article 30 paragraph (2).

(6) The FSC shall, when the management improvement plan submitted by a futures firm, which has received the management improvement order pursuant to Article 30 paragraph (1), is deemed infeasible, disapprove such plan, and may take all or part of the actions provided in Article 35 paragraph (3).

(7) The Governor shall determine specific matters pertaining to the organization and operation of the Management Assessment Committee under paragraph (3).

§33. Implementation Period of Management Improvement Plan <Amended December 29, 2000>

(1) The period for implementing the management improvement plan of a futures firm, which has received the management improvement recommendation pursuant to Article 28, shall be within six months after such plan is approved.

(2) The period for implementing the management improvement plan of a futures firm, which has received the management improvement requirement pursuant to Article 29, shall be within one year after such plan is approved. However, in case a futures firm which has received the management improvement recommendation pursuant to Article 28 receives the management improvement requirement in the course of implementing such plan, such period shall not exceed one year from the date on which the management improvement plan for such recommendation is approved.

(3) The period for implementing the management improvement plan of a futures firm, which has received the management improvement order pursuant to Article 30, shall be determined by the FSC.

(4) When a futures firm, which has received the management improvement recommendation, requirement, or order, has made a substantial improvement in its management conditions through an early achievement of the major elements in its management improvement plan such as capital increase or resolution of nonperforming assets and so on, the administrative authority concerned may lighten the contents of the initial prompt corrective action, or exempt the implementation thereof.

(5) When it is judged that a futures company, which has received the management improvement recommendation, requirement, or order has achieved a sufficient normalization in its management through implementing the management normalization plan sincerely upon expiration of the implementation period, the administrative authority concerned shall notify such futures company that the initial prompt corrective action has been released. And in case such company falls under the criteria under Article 28 paragraph (1), Article 29 paragraph (1), or Article 30 paragraph (1) due to the failure in achieving normalization of its management, such administrative authority shall take necessary prompt corrective action in accordance with the same articles. <Amended December 29, 2000>

§34. Report on Implementation of Management Improvement Plan and Request for Correction <Amended December 29, 2000>

(1) Any futures firm, which has obtained management improvement plan pursuant to Article 32 paragraph (2), shall file with the Governor the quarterly implementation result of such plan within 10 days from the end or each quarter.

(2) The Governor may, when the implementation result of any management plan is behind the target or it deems that it is difficult to implement such plan due to the changes in condition, such as amendment of relevant system, take necessary action, such as request for a modification of such plan, demand for an implementation within 3 specified period of time, etc, However, the Governor shall, when requesting the modification or demanding the implementation from a futures company which has received management improvement requirement or order, report such fact to the FSC in advance.

(3) Article 32 paragraph (2) to (6) shall apply mutatis mutandis to the case where any futures company files its management improvement plan whose material part was modified in accordance with the provisions under paragraph (2).

(4) Any futures firm, which has implemented the management improvement plan pursuant to Article 33 paragraph (1) to (3), shall promptly file with the Governor the implementation result of such plan.

§35. Measures for Nonperformance of Management Improvement Plan <Amended December 29, 2000>

(1) When the Governor judges that a futures firm, which has received the management improvement recommendation pursuant to Article 28 paragraph (1), fails to sincerely implement the management improvement plan, the FSC shall require such company to implement all or part of the measures under Article 29 paragraph (2) within a specified period of time.

(2) The FSC shall, when it judges that a futures firm which has received the management improvement requirement, even though it was urged to implement the management improvement plan pursuant to Article 34 paragraph (2) due .to the failure in implementing the material part of such plan, will be unable to normalize its management because such company does to, or is unable to, implement such plan, order Such company to take all or part of the measures under Article 30 paragraph (2).

(3) The FSC may, when it judges that a futures firm which has received the management improvement order pursuant to Article 30 paragraph (1) failed to normalize its management because such firm did not implement the material part of the management improvement plan within the period under Article 33, take all or part of the following measures against such company:

1. Measures under Article 30 paragraph (2);

2. Revocation of license granted to such futures firm;

3. Recommendation on dismissal of officers; and

4. Other measures necessary for the protection of customers.

§36. Emergency Measures

(1) Notwithstanding Article 28 to Article 30, the FSC may take necessary measures when it judges that it is difficult for any futures firm to normally manage its business because its financial condition is significantly aggravated or that the continuation of its business may lead to the detriment of the protection of customers or stability of the futures market due to any of the following reasons: <Amended December 29, 2000>

1. Cases where issued notes or checks are dishonored or the transactions with banks are suspended or prohibited;

2. Cases where insolvency of refunding customer's deposited properties occurs because of significantly worsened liquidity position following a rush by customers to withdraw their properties, or nonperformance of derivative contracts in futures trading markets occurs or is likely to occur;

3. Cases where it is impossible and difficult to do normal business due to the suspension of operations or suspension of business ; or

4. Cases where, among the companies whose net property is lefts than 2 billion won, it is deemed that it is difficult for any company to normally conduct its business.

(2) "Necessary emergency measures" under paragraph (1) refer to those failing under of the following subparagraphs:, <Amended December 29, 2000>

1. Order to refund all or part of customer's deposited properties, or to suspend refund;

2. Prohibition of receiving property entrustment from customers or transfer of customer's deposited properties and contracts to other futures business companies;

3. Prohibition of repaying debts;

4. Measures under Article 30 paragraph (2); and

5. Other measures necessary for the protection of customers,

Section 3.

Restrictions on Individual Asset Management and Internal Control of Financial Risks

§37. Restriction on Ownership of Securities Issued by Principal Investors

(1) No futures company shall own or acquire as collateral securities or CPs issued by its principal shareholders, except for any of the following cases. However, when any futures firm owns or acquires as collateral such securities or CPs since the case falls under the provisions of subparagraph 3 or 4, it shall dispose of them within three months after the ownership or security right thereof is acquired, except for the cases separately admitted by the Governor: <Amended December 29, 2000>

1. Cases of owning or acquiring as collateral the corporate bonds under Article 2 paragraph (1) subparagraph 3 of the Securities and Exchange Act;

2. Cases of owning or acquiring as collateral the corporate bonds on which the principal and interest are guaranteed by financial institutions which are entitled to engage in the bond guarantee business under the relevant statutes;

2-2. Cases of acquiring any securities or CPs for the use as margin from any persons other than arty issuer himself for the engagement in the futures business;

3. Cases, except for those under subparagraph 2-2, of owning or acquiring as collateral securities or CPs for the purpose of exercising the right of the futures firm concerned;

4. Cases, except for the cases under subparagraph 2-2, where the securities or CPs already owned or acquired as collateral have become those issued by any principal investor when such Principal investor is changed.

(2) No futures firm shall own or acquire as collateral the stocks (excluding those acquired for equity investment), bonds, or CPs issued by the persons having a special relationship in excess of 8/100 of its shareholders' equity. In this case, any securities or CPs which are issued by its principal investors and owned or acquired as collateral pursuant to the provisions under paragraph (1) shall be included in the limit. However, for the cases failing under the provisions under paragraph (1) subparagraph 3 or 4, it may own or acquire as collateral them in excess of such limit for up to three months. <Amended December 29, 2000>

(3) No futures firm shall lend money or extend credits to the persons having a special relationship. However, this provision shall not apply to the cases where it lends money to any of its officers within the amount of his annual remuneration. <Amended December 29, 2000>

(4) When any futures firm concludes a contract on OTC derivative contracts with any person having a special relationship as its counter party, it shall avoid the risk of loss through hedging, etc, and when conducting other transactions therewith, it shall not conduct them under unfavorable conditions in comparison with the crises where the same transaction is conducted on the market or with any person other than those having a special relationship as its counter party. <Amended December 29, 2000>

(5) The shareholders' equity under paragraph (2) refers to the amount calculated by the following formula, and until the financial statements are fixed after obtaining the approval of a shareholders' meeting,' the latest closing date" in the following formula shall be construed as 'the immediately preceding closing date'.

Shareholders' equity = total assets as of the latest closing date - total liabilities as of the latest closing date - external outflow amount by the appropriation of surplus (including the amount to be outflows) after the latest closing date +/- increase or decrease in capital stock and surplus after the latest closing date (excluding net profit or loss for the current year and adjusted amount of retained earnings carried over to subsequent year (or deficit carried over to subsequent year)).

§38. Prohibition of Liability Guarantee

No futures firm shall provide viability guarantee for other persons, However, this provision shall not apply to the cases where any guarantee is provided in connection with its business in accordance with statutes and those separately admitted by the Governor as being unavoidable for conducting the futures business. <Amended December 29, 2000>

§39. Prohibition of Credit Extensions

No futures firm shall lend money or provide liability guarantee or other credits to any customer in relation to his derivative contracts. In this case, when any futures firm has inevitably made payment for a customer's deficient amount due to the nonperformance of deposit of customer margin or settlement amount, and undertaken the replenishment procedures of claims in accordance with statutes such as forced disposition of customer's properties or imposition of overdue payment, it shall not be deemed credit extension. <Amended December 29, 2000>

§40. Internal Control Standards <Amended December 29, 2000>

(1) Every futures firm shall include the following matters in its internal control standards in accordance with Article 10-5 of the Decree:

1. Types and definitions of the risks, such as financial risk, operation risk, and legal risk to be controlled;

2. Methods and Standards of control for each risk; and

3. Procedures for execution of risk control.

(2) The Futures Association (hereinafter, "the Association") may prepare the standard internal control standards and recommend every futures company to adopt such standards.

§41. Keeping Records on Off-the-Balance Sheet Transactions

Every futures firm shall prepare and keep and the record on derivative contracts on the basis of the time of occurrence (including the contract for the trading concerned and the supplementary documents thereof) that is not shown in its financial statements. <Amended December 29, 2000>

Section 4.

Management Disclosure

§42. Management Disclosure

(1) Every futures firm shall disclose the following information within two months from the half-year closing date, and within four months from the closing date: <Amended December 29, 2000>

1. Information on organization and manpower;

2. Information on finance and profit and loss;

3. Information on supply and use of funds;

4. Information on management indicators showing soundness, profitability, and productivity; and

5. Information to be specifically requested by the Governors which decisively affect its management such as business policy, risk management,

(2) Concrete disclosure items and methods in regard to the information under paragraph (1) shall comply with the Disclosure Standards of Futures Business Companies to be formulated by the Association. <Amended December 29, 2000>

(3) Every futures firm shall, when falling under any of the following cases, disclose the Content thereof: <Amended December 29, 2000>

1. Cases where large amount of loss or any financial scandal occurs:

2. Cases where any action such as management improvement recommendation, etc, pursuant to Article 28 to Article 30, Article 32, Article 35 to Article 36 is taken;

3. Cases to be determined by the Governor which are corresponding to subparagraphs 1 and 2.

(4) The objects, contents, method, time of the disclosure pursuant to the provisions under paragraph (3) shall be determined by the Governor.

(5) The Governor may, when any futures company makes unfaithful disclosure such as false disclosure or omission of material information with regard to the management information subject to disclosure under paragraphs (1) through (3), demand such company to make correction of disclosure or re-disclosure. <Amended December 29, 2000>

CHAPTER III-2.

SUPERVISION ON FOREIGN EXCHANGE SOUNDNESS

Section 1.

General Provisions

§42-2. Definitions of Terms <Amended December 29, 2000>

(1) The term "foreign exchange business handling futures company" refers to any futures firm which has registered the foreign exchange business pursuant to Article 8 paragraph (1) of the foreign Exchange Transaction Act.

(2) The terms not defined in this Chapter shall have the same meanings given to them in the relevant statutes.

(3) Of the provisions in this Chapters Article 42-5 and Article 42-6 shall not apply to any foreign exchange futures firm whose head office is located in a foreign country.

Section 2.

Registration of Foreign Exchange Business Handling Futures Firms

§42-3. Requirements for Registration

(1) "Standards for financial soundness applicable to financial institutions concerned determined by the FSC" under Article 13 paragraph (2) subparagraph 1 of the enforcement decree of the Foreign Exchange Transactions Act shall be as the following subparagraphs.

1. Minimum capital standards under Article 9 of the Banking Act;

2. Equity capital standards under Article 26;

(2) When the Minister of Finance and Economy requests the confirmation of adequacy of the requirement for registration under Article 13 paragraph (3) of Enforcement Decree on Foreign Exchange Transaction Act, the Governor shall confirm it in accordance with the standards under paragraph (1).

§42-4. Alteration of Registration

(1) When intending to establish or close its domestic offices handling foreign exchange business or to change its addresses pursuant to Article 16 paragraph (1) of the decree of the Foreign Exchange Transactions Act, a foreign exchange futures firm shall report to the Governor at least seven days before the date thereof.

(2) Detailed matters concerning declaration under paragraph (1) shall be determined by the Governor.

Section 3.

Management of Foreign Exchange Soundness

§42-5. Foreign Exchange Liquidity Ratio <Amended December 29, 2000>

(1) In accordance with Article 21 subparagraph 4 of the Enforcement Decree of the Foreign Exchange Transaction Act, every foreign exchange futures firm shall classify and administrate its foreign currency assets and foreign currency liabilities by each period to maturity, and maintain the ratios as provided in the following. This provision, however, shall not apply where the ratio of total assets to foreign currency liabilities is less than 1/100:

1. Ratio of the assets with the period to maturity of up to three months to the liabilities with the period to maturity of up to three months: 80/100 or larger;

2. Mismatched maturity ratio in foreign currency assets and foreign currency liabilities:

a. Where the period to maturity is seven days or less, the ratio of the amount obtained by subtracting liabilities from assets to liabilities is 0/100;

b. Where the period to maturity is one month or less, the ratio of the amount obtained by subtracting assets from liabilities to liabilities is within 10/100.

(2) The method of classifying the period to maturity, scope of assets and liabilities, and the method of calculating ratios as stipulated under paragraph (1) shall be determined by the Governor.

§42-6. Internal Management of Foreign Exchange Futures Firms <Amended December 29, 2000>

(1) A foreign exchange futures firm shall establish and operate its internal management standards for each kind of risks occurred in foreign currency transactions, such as country risks, large credit risks, financial derivatives transaction risks, market risks and others under Article 21 subparagraph 6 of the Enforcement Decree of the Foreign Exchange Transactions Act

(2) In the event a foreign exchange futures firm intends to establish and alter the management standards or make foreign currency transactions beyond the management standards under paragraph (1), it shall pass through the resolution of an internal risk management organization.

(3) The Governor shall establish examplary standards, and when the risk management standards of a foreign exchange futures firm are deemed inappropriate, the Governor may request the correction thereof.

Section 4.

Sanctions against Violations of the Supervision on Foreign Exchange Soundness

§42-7. Sanctions for Failure to Achieve Foreign Currency Liquidity

(1) In the event a foreign exchange futures firm to achieve and maintain the ratios prescribed under Article 42-5 twice or less during the past one year period (and three times or less during the past one year period with respect to the ratios provided under Article 42-5 paragraph (1) subparagraph 2 item a), it shall submit an explanatory statement and recovery plan to the Governor in accordance with the stipulations of the Governor.

(2) In the event a foreign exchange futures firm fails to achieve and maintain the ratios prescribed under Article 42-5 three times during the past one year period, ascended ratios under the following subparagraphs shall be applied notwithstanding Article 42-5.

1. Ratio provided under Article 42-5 paragraph (1) subparagraph 1 : 85/100 or above

2. Ratio provided under Article 42-5 paragraph (1) subparagraph 2 item b : 5/100 or below

(3) Where a foreign exchange futures firm becomes applicable under the following subparagraphs, it shall suspend new borrowings in foreign currency with maturity of less than three months (except the Call Money with maturity of less than 30 days) until it achieves the ratios under the following subparagraphs.

1. Failure to achieve and maintain the ratios provided under paragraph (2) subparagraph 1 or Article 42-5 paragraph (1) subparagraph 1 at least four times during the past one year period : 85/100 or above.

2. Failure to achieve and maintain the ratios provided under Article 42-5 paragraph (1) subparagraph 2 item a at least four times during the past one year period : 5/100 or above.

3. Failure to achieve and maintain the ratios provided under paragraph (2) subparagraph 1 or Article 42-5 paragraph (1) subparagraph 2 item b at least four times during the past one year period : 5/100 or below.

(4) Even where sanctions are applicable under paragraph (2) or (3), where inextricable due to economic and financial circumstances domestic and abroad, the Governor may recommend exemption, suspension or removal of sanctions in effect to the FSC; provided that, for exemption, sanction subject to exemption shall not be counted toward the number of violation.

(5) In the event a foreign exchange futures firm fails to achieve and maintain the ratios provided under Articles 42-5 at least twice during the past one year period, the Governor may take actions necessary to the company such as shortening the length of reporting cycle provided under Article 42-9.

§42-8. Status Report on Sanctions

When imposing sanctions against foreign exchange futures firms in violation of Article 42-5, the Governor shall report the status of sanctions to the FSC within one month after the end of every quarter.

Section 5.

Reporting on Foreign Exchange

§42-9. Reporting

A foreign exchange futures firm shall report its current status of assets and liabilities in foreign currency, its current status of financing and operation of funds in foreign currency and other matters necessary for enforcement of this Chapter in such manners as determined by the Governor.

CHAPTER IV.

ENTRUSTMENT BUSINESS OF FUTURES FIRMS

Section 1.

General Provisions

§43. Definitions of Terms

The terms used in this Chapter shall be defined as follows, and those not defined herein shall have the same meanings given to them in the relevant statutes: <Amended December 29, 2000>

1. The term "futures contract" refers to a contract which falls under Article 11 subparagraph 2 item a (excluding the stock index futures traded on the KSE; the same hereinafter) or Article 11 subparagraph 2 item b;

2. The term "option contract" refers to a contract which falls under Article 11 subparagraph 4 item a (excluding the stock index option traded on the KSE; the same hereinafter) or Article 11 subparagraph 4 item b;

3. The term "open interest" refers to a futures or option contract that has not been terminated through long liquidation, short covering, final settlement, option exercise, assignment of option exercise, or lapse of option exercise period, etc, ;

4. The term "mediating order" refers to any order, which a futures firm, after receiving a customer's order, mediates to another futures company in the name of a customer and for such customer's own account.

§44. Mutatis Mutandis Application of Brokerage Contract Rules

The Brokerage Contract Rules of the Futures Exchange shall apply mutatis mutandis to the matters not stipulated under this Regulation in relation to the entrustment business. <Amended December 29, 2000>

§45. [Deleted on December 29, 2000]

Section 2.

Establishment of Futures and Options Trading Account

§46. Delivery of Risk Disclosure Statement

(1) Any futures firm shall, prior to establishing an account (hereinafter, "futures and options trading account') for receiving, mediating, arranging, or representing (hereinafter, "entrustment receiving") an order from a customer in relation to trading of futures or option contracts, deliver and sufficiently explain to any customer the risk disclosure statement containing the following information (hereinafter, "risk disclosure statement"): <Amended December 29, 2000>

1. Outline of system of futures or option contract trading;

2. Fact that since a futures or option contract trading requires investment experience and funds capability, decision as to whether to engage in trading should be made in sufficient consideration of the property situation;

3. Fact that the amount of loss may exceed the deposits;

4. Fact that in the case of increase of loss amount or increase in customer margin, property should be additionally deposited in a short period of time;

5. Fact that the futures company may, in case additional deposit is not made, forcefully dispose of futures contracts, option contracts, or deposited customer's property;

6. Fact that any customer should carefully select a futures company because in case of nonperformance of settlement or bankruptcy of a futures company, even when this does not result from a cause attributable to the customer, the all or part of such customer's property can be lost or it's return can be delayed;

7. Fact that the return of deposited property can be requested only to the trustee futures company and is not protected by the Depositors Protection Act, and;

8. Fact that since subparagraphs 1 through 7 do not fully describe the system of, and risks associated with, futures or option trading, details concerning those can be confirmed through the futures company.

(2) Every futures firm shall keep for at least five years after the closing of the customer's account a document bearing the customer's name or signature and seal clearly stating that it has delivered and explained the risk disclosure statement, and the customer engages in the transaction on his own judgment and responsibility. <Amended December 29, 2000>

(3) Every futures firm may, when its customer is a futures company, omit the duties under the provisions under paragraph s(1) and (2). <Amended December 29, 2000>

§47. Conclusion of Contract for Establishing Futures and Options Trading Account

(1) Any futures firm shall, when a customer applies for establishing an account, conclude an agreement with the customer in writing (hereinafter, "account establishment agreement') after confirming the real name of such customer. However, it may entrust the real name confirmation affairs and receipt of applications for account establishment agreement to financial institutions with which a business cooperation agreement has been concluded. <Amended December 29, 2000>

(2) The Association may formulate the standard form for account establishment agreement (hereinafter, "standard account establishment agreement"). In this case, the Association shall declare to the Governor the contents of the formulation or modification of the standard account establishment agreement at latest 15 days prior to the scheduled date of its enforcement.

(3) Any futures firm shall, when intending to modify important contents of the standard account establishment agreement, report the standard agreement to be modified (hereinafter, "individual account establishment agreement") to the Governor at latest 15 days prior to the scheduled date of its enforcement. However, this provision shall not apply to the crises where an agreement is made with a customer through individual negotiations without uniformly applying to unspecified customers. <Amended December 29, 2000>

(4) The Association and futures firms shall observe the following matters when formulating the standard account establishment agreement and individual account establishment agreement: <Amended December 29, 2000>

1. Easy expressions should be used for customers to understand;

2. For those contents that significantly affect the rights and obligations, large letters or distinguished expressions shall be used so that any customer may easily recognize them.

(5) The Governor may, when necessary for the protection of customers, recommend any modification of the standard account establishment agreement or individual account establishment agreement upon presentation of the reasons.

§48. Establishment of Futures and Options Trading Account for Non-Members of Futures Exchange

(1) When any futures firm other than members of a futures exchange (hereinafter, "non-exchange member") enters into an account establishment contract with a customers the non-exchange member shall, in the case of handling its customer's orders, proceed by establishing in his name a futures and options trading account (hereinafter, "non-exchange members' exclusive account for orders") at a futures firm which is a member of the futures exchange (hereinafter, "exchange member"). In this case, to each account name, it shall attach a distinguishing sign for the corresponding customer. <Amended December 29, 2000>

(2) Any non-exchange member shall handle the orders of a customer through the non-exchange members' exclusive account for orders, and shall not use such exclusive account for proprietary trading or other customer's trading.

(3) When any exchange member demands a non-exchange member to provide the information that does not conflict with the Act on Real Name financial Transactions and Protection of Confidentiality and other relevant statutes, such non-exchange member shall sincerely respond to the demand.

Section 3.

Processing Orders

§49. Notification of Results of Executed Transactions

When any futures firm has confirmed the conclusion of a customer's trading of futures or option contracts on the one hand, or the final settlement, option exercise, or assignment of option exercise with respect to open interest, on the other hand, it shall promptly notify the fo1lowing information to such customer. [December 27, 2000]

1. Time of execution;

2. Classification of series

3. Classification of trading;

4. Quantity;

5. Price;

6. Overall expenses such as brokerage commission;

7. Matters related to customer's deposited property and customer margin; and

8. Other information deemed necessary to make notice to customers by such futures firm. <Amended December 29, 2000>

§50. Notification of Monthly Trading Record

(1) Every futures firm shall, with respect to the accounts recording transactions for the preceding month, notify the customer of the following information by the 20th day of the following month, and keep its evidence for at least six months: <Amended December 29, 2000>

1. Monthly transaction record and status of open interest as of the end of the month;

2. Profit and loss for the month;

3. Balance of the deposited property and status of customer margin requirements as of the end of the month; and

4. Other information deemed necessary to make notice to customers by such futures company. <Amended December 29, 2000>

(2) Every futures firm shall, with respect to the accounts recording no transactions for the preceding half-year period, notify such customer of the information which he should be concerned about from among the information under paragraph (1), within 20 days after the termination of the half-year period, and keep its evidence for at least six months. <Amended December 29, 2000>

(3) Every futures firm shall, in the following cases, promptly notify the customer of the details of open interest and contents of customer's deposited property, and keep its evidence for at least six months: <Amended December 29, 2000>

1. Cases where a customer's registered seal for trading has been changed;

2. Cases where a customer's means of proof for trading, such as trading account book and trading card has been re-issued;

3. Cases where a futures and options trading account has been transferred to the futures company concerned from another business office or futures company; and

4. Cases where it recognizes that any notice to customers should be necessary. <Amended December 29, 2000>

(4) The duty to notice for meditating orders pursuant to the provisions under paragraph (1) through (3) shall be carried by any futures firm, which has received the entrustment order through mediation. <Amended December 29, 2000>

§51. Exception to Notify Customers

Any futures company may not, when a customer declines the notice by means of a letter bearing his name and seal or signature, make notice pursuant to Article 49 and Article 50 paragraphs (1) and (2). <Amended December 29, 2000>

§52. Duty to Notify Transaction Errors in Processing Customer's Orders

Any futures company shall, when a customer's order has been executed differently from the actual order or an order capable of being executed has not been executed due to an error of its officers or employees, promptly notify such customer of the details of error and compensation measures, and keep its evidence for at least five years. <Amended December 29, 2000>

Section 4.

Management of Customer's Property

§53. Prohibition of Receiving Entrustment of Customer's Property at the Time of Mediation

Any futures firm shall, when mediating an entrustment orders refrain from receiving any entrustment of the customer's property, other than receiving an intermediation commission. <Amended December 29, 2000>

§54. Issuance of Evidence for Entrusted Property

Any futures firm shall, when receiving an entrustment of property from a customers deliver to such customer a trading account book or trading card issued under the name of such company. <Amended December 29, 2000>

§55. Management Principle of Entrusted Property

(1) Every futures firm shall separately administer the entrusted property (including the property resulting from customer's trading; the same hereinafter) in distinction from its own property. <Amended December 29, 2000>

(2) No futures firm shall use any entrusted property for any persons other than the customer concerned. <Amended December 29, 2000>

(3) Any futures firm shall, when intending, for the sake of a customer's trading, to provide the entrusted property as collateral or deposit it at any other institution (hereinafter, "other depository institution") than securities finance companies (hereinafter, "depository institution"), obtain the written approval of such customer in advance with regards to the following matters'. <Amended December 29, 2000>

1. Matters that the scope of other depository institutions covers the futures exchange, overseas futures markets, other futures business companies, persons engaging in the business overseas that corresponds to futures trading, foreign exchange brinks;

2. Matters concerning other depository institutions' right to voluntarily dispose of customer's property (it should be clearly stated that this provision apply even in the absence of a reason attributable to the customer); and

3. Matters concerning the right to claim for the return of customer's deposited property and the right to claim for damages (it should be clearly stated that such rights are not subject to protection under the Depositors Protection Act).

(4) No futures firm shall, except for the cases necessary for the customer's trading or unavoidable for other reasons, provide entrusted properties as collateral or deposit them at other depository institutions. <Amended December 29, 2000>

§56. Separate Custody of Customers' Deposits

(1) Any futures firm shall, when receiving customer's deposits, promptly deposit an amount of no less than such customer's deposits at the depository institution or other depository institutions. <Amended December 29, 2000>

(2) Any futures firm shall, when intending to deposit customer's deposits, make posit by establishing an exclusive account for customers' deposits. <Amended December 29, 2000>

(3) Every futures firm shall clearly state the following matters in the written agreement for establishing an exclusive account for customers' deposits: <Amended December 29, 2000>

1. Name of depositor (in the name of such futures company and with an additional remark of "customer's deposits") ;

2. Matters that it has fully explained that the deposits are customer's deposits, and the other depository institution has recognized such fact;

3. Matters that the party to agreement will not provide the deposits as collateral or transfer them to any party, except for the crises under the relevant statutes or without the approval of the Governor;

4. Matters that other depository institution will neither set off the deposits with the claims on such futures company or other third party nor attach them (including provisional attachment);

5. Contents that, in the case where any cause for preferential payment pursuant to Article 49-2 paragraph (4) of the Act has occurred to such futures firm, it will observe any instruction to that effect issued by the Governor.

§57. Checking of Separate Custody Status of Customer's Deposits and Withdrawal Thereof

(1) Every futures firm shall manage the deposits so that the sum of the following amounts as of the close of each trading duty may not fall below the customers' deposits as of the same time: <Amended December 29, 2000>

1. Balance of the deposit in the depository institution's exclusive account for customers' deposits;

2. Balance of the deposit in the other depository institution's exclusive account for customers' deposits.

(2) Every futures firm may, in the following cases, withdraw money from the depository institution's or other depository institution's exclusive account for customers' deposits : <Amended December 29, 2000>

1. For the fulfillment of customer's request for the return of deposits;

2. Cases of withdrawal of such deposits within 5/100 thereof in order to meet the customer's request for the return of deposits;

3. For the settlement of the settlement money, daily settlement variation amount, loss, or other overall expenses arising from the customer's futures or option contract trading;

4. For the provision of such deposits as collateral or for the deposition thereof at other depository institution for the sake of the customer's futures or option contract trading;

5. Cases of disposition of such deposits in accordance with the relevant statutes in order to secure the claims on the customer;

6. Cases of withdrawal of such deposits from other depository institution in order to deposit them at the depository institution;

7. Cases of withdrawal of the excess portion from the customer's deposits; and

8. Other crises with the approval of the Governor.

(3) Any futures firm shall, when intending to obtain the approval of the Governor pursuant to the provisions under paragraph (2)8, apply for approval with a document in which the following information is stated : <Amended December 29, 2000>

1. Time of withdrawal;

2. Amount to be withdrawn:

3. Use of withdrawn funds; and

4. Method and period for restoring the amount withdrawn.

(4) Any futures firm may, in the following cases, assign to another futures firm the portion equivalent to the customers' deposits, from among the money deposited in the depository institution's or other depository institution's exclusive account for customers' deposits: <Amended December 29, 2000>

1. Cases where it has obtained the consort of the Governor on assignment in the case of assignment of business, suspension of all or part of business, nonperformance of settlement, bankruptcy, or occurrence of other similar reasons. <Amended December 29, 2000>

2. Cases where any customer has applied for account transfer to another futures firm; or <Amended December 29, 2000>

3. Cases where the instruction of the Governor is given.

(5) Every futures firm shall keep record regarding the following subparagraphs for least five years from the base date: <Amended December 29, 2000>

1. Customers' deposits as of the close of each trading day;

2. Deposits in the depository institution's exclusive account for customers' deposits as of the close of each trading day;

3. Deposits in other depository institution's exclusive account for customers' deposits as of the close of each trading day.

§58. Management of Customer's Deposits by Depository Institutions

Every depository institution may manage its customer's deposits by any of the following methods:

1. Deposit at the Bank of Korea or banking institutions, the return of which in excess of its principal is guaranteed under Depositors Protection Act;

2. Buying bonds with repurchase agreement;

3. Buying the bonds issued by the corporations established under the special laws or by the public corporations under the Securities and Exchange Act;

4. Extending loans secured with securities;

5. Extending call loans within 10/100 of the average balance of customers' deposits for the last month. In this case, the counter party of the call loans shall be limited to the persons against whom any prompt corrective action has not been taken by the FSC and which are recognized by the depository institution as being unlikely to fail or delay in redeeming debts, and in the case where counter party of the call loans is a futures company, the ceiling shall be 10/100 of the balance of the customers' deposits deposited at the futures company;

6. Purchase of negotiable CDs issued by the banking institutions under the Banking Act whose BlS capital adequacy ratio exceeds 8/100, the Korea Development Bank under the Korea Development Bank Act, and the Industrial Bank of Korea under the Industrial Bank of Korea Act.

§59. Management of Non-Monetary Entrusted Property

(1) Every futures firm shall promptly deposit with the KSD any property designated as an object for deposit by the KSD, from among entrusted properties such as general products and financial products excluding negotiable securities, certificates, instruments, and other currencies (hereinafter, "non-monetary entrusted property"). <Amended December 29, 2000>

(2) Every futures firm shall entrust a custodian with the protection of the properties not designated by the KSD as an object for deposit from among the non-monetary entrusted properties. However, when it is difficult to make such entrustment due to unavoidable reasons, it shall keep them in a safe custody facility in distinction room its own property. <Amended December 29, 2000>

(3) Every futures firm shall conclude an agreement in such manner as stipulated under Article 56 paragraph (3) with the KSD with a custodian in the case of the protection entrustment under paragraph (2). <Amended December 29, 2000>

§59-2. Deposition of Securities <Amended December 29, 2000>

"Securities to be determined by the FSC" under Article 13-9 paragraph (1) subparagraph 2 and paragraph (2) subparagraph 2 of the Decree refer to foreign currency securities under the Foreign Exchange Transaction Act.

§60. Transfer of Customers' Futures and Options Trading Account

(1) Any futures firm shall, when falling under subparagraph 1 of the following list, promptly transfer customers' futures and options trading account to another futures firm. However, this provision shall not apply to the cases which fall under subparagraph 2 and the account requires additional deposit of customer margin or settlement money: <Amended December 29, 2000>

1. Cases where it judges on its own that a deterioration in manpower or physical facilities makes it difficult to perform the duties to customers;

2. Cases where any customer has applied for the transfer of its account by presenting a document specifying the name and account number of the futures company to receive the futures and options trading account (hereinafter, "the receiving futures company"); and

3. Cases where the Governor has ordered it to transfer account.

(2) Any transferring futures firm shall, in the case under paragraph (1) subparagraph 1, notify its of its intention of transfer in advance, and receive in writing the name and customer account number of the receiving futures company from such customer. <Amended December 29, 2000>

(3) Any transferring futures firm shall, prior to the transfer of customer's futures and options trading account, obtain the consent of its customer, the futures exchange, the receiving futures company, and other related parties on the following matters: <Amended December 29, 2000>

1. Date of transfer;

2. Details on open interest to be transferred;

3. Details on entrusted property to be transferred; and

4. Other matters deemed necessary by the concerned parties

§61. Handling Problems in Case of Nonpayment of Customer Margin or Settlement Money

(1) Any futures firm may, in the following cases, voluntarily dispose it's customer's futures and options contracts or all or part of the customer's deposited properties to cover the customer margin or settlement money without issuing a peremptory notice to, or obtaining the approval of, the customer: <Amended December 29, 2000>

1. Cases where any customer has failed to perform her duty to make additional deposit within any given time after receiving a request for additional deposit of customer margin or settlement money;

2. Cases where it has failed to request an additional deposit of customer margin or settlement money from any customer before the deadline for the additional deposit because of such customer's faults or for inevitable reasons not attributable to it.

(2) Any futures firm shall, when it has voluntarily disposed of the customer's property pursuant to the provision under paragraph (1), promptly notify its customer of such fact and the details. <Amended December 29, 2000>

Section 5.

Trading on the Company's Own Account

§62. Keeping Records on Orders and Execution of Trading

Every futures company shall, in relation to the futures or option contract trading for its own account, keep the records of the following subparagraphs for at least ten years from the base date: <Amended December 29, 2000>

1. Account number;

2. Date of order and contract;

3. Name of the decision maker for the order;

4. Classification of series;

5. Classification of trading,

6. Types of order;

7. Quantities ordered and executed;

8. Order price and execution price;

9. Fixed gain and loss of each trading day, settlement groin and loss of the futures contracts, and valuation gain and loss of option contracts; and

10. Status of the number of open interest by series 3s of the close of each trading day.

§63. [Deleted on December 29, 2000]

CHAPTER V.

OVERSEAS FUTURES AND OPTIONS TRADING

§64. Definitions of Terms and Application

(1) The terms used in this Chapter shall have the same meanings as defined in the following: <Amended December 29, 2000>

1. The term "overseas futures and options trading" refers to a trading of futures contract or option contract conducted in overseas futures markets;

2. The term "proprietary account" refers to an account which a futures firm establishes, in order to conduct overseas futures or option trading in its own name and for its own account, with a member of an overseas futures market (hereinafter, "overseas futures market member") or a person who can mediate trading to an overseas futures market member (hereinafter, "overseas futures intermediary");

3. The term "omnibus account" refers to an account a futures firm establishes with an overseas futures market member or overseas futures intermediary in order to conduct overseas futures and options trading in its own name and for its customer's account;

4. The term "intermediation account" refers to an account a customer establishes with an overseas futures market member or overseas futures intermediary in his own name and for his account in order to conduct overseas futures and options trading through the brokerage of a futures company.

(2) The provisions of sections 2 through 5 of Chapter IV shall apply mutatis mutandis to overseas futures or option trading. However, in case there is any provision otherwise stipulated under these Chapters such provision shall precedently apply thereto.

§65. Risk Disclosure Statement for Overseas Futures and Options Trading

Every futures firm shall include the following subparagraphs in addition to the matters under Article 46 paragraph (1) in the risk disclosure statement to be delivered to a customer of overseas futures option trading (hereinafter, "risk disclosure statement for overseas futures option trading"): <Amended December 29, 2000>

1. Fact that overseas futures option trading is accompanied by the risk of foreign exchange rate fluctuation;

2. Fact that the general trading circumstances for overseas futures and options trading are disadvantageous with respect to the acquisition of price information, speed of handling orders, etc.; and

3. Fact that overseas futures market system may differ from that of the domestic market.

§66. Separate Management by Account

(1) Every futures firm shall separately establish and manage proprietary account, omnibus account, and intermediation account, and it shall not manage the different type of accounts as subordinated accounts of one mother account, as subordinated account and mother account, or as other united accounts. <Amended December 29, 2000>

(2) Article 56 paragraph (3) shall apply mutatis mutandis to the omnibus account.

(3) Every futures firm shall not hold a proprietary account or omnibus account with any overseas futures market member or overseas futures intermediary which falls below the financial soundness standards or similar financial standards established by the futures regulatory authority of the country concerned, and it shall promptly notify any customer who holds an intermediation account with the fact of fall. <Amended December 29, 2000>

(4) Every futures firm shall keep the following information for at least five years from the closure of the account concerned: <Amended December 29, 2000>

1. Details of establishment of each proprietary account, omnibus account, and intermediation account;

2. Each account agreement; and

3. Trading details for each account.

§67. Designation of Foreign Exchange Bank Account

(1) Any futures firm other than foreign exchange banks shall, in order to remit or collect funds associated with overseas futures and options trading through omnibus account or proprietary account, establish at a foreign exchange brink a foreign currency account and domestic currency account respectively for the omnibus account and proprietary account, in distinction from other accounts, In this case, Article 56 paragraph (3) shall apply mutatis mutandis to the foreign currency account and domestic currency account for the Omnibus account. <Amended December 29, 2000>

(2) Any futures firm shall, in order to remit or collect funds associated with overseas futures and options trading to or from a customer requesting any brokerage of overseas futures and options trading, grasp and control the details on customer's foreign currency account and domestic currency account established at a foreign exchange brink in distinction from other accounts. <Amended December 29, 2000>

§68. Overseas Trading with Credit

(1) Any futures firm or customer holding an intermediation account may conduct trading in which the credit provided by an overseas futures market member or overseas futures broker is used to cover the funds for overseas futures and options trading (hereinafter, "overseas trading with credit"). <Amended December 29, 2000>

(2) Any futures firm shall not, even in the case of acquiring overseas credit through the omnibus account, provide such credit to any customer or have any customer pay the price for its use. <Amended December 29, 2000>

(3) Any futures firm shall, when coming to learn that the overseas credit provided to it or any customer has been used otherwise than for the purposes of overseas futures and options trading, report such details to the Governor without delay. <Amended December 29, 2000>

(4) The Governor may, when necessary for the maintenance of order in futures and options trading or for the protection of public interests, impose restrictions on overseas trading with credit for each futures firm or customer. <Amended December 29, 2000>

(5) Every futures firm shall keep the following date concerning the customers using proprietary accounts or intermediation accounts for at least five years from the base date: <Amended December 29, 2000>

1. Overseas margin trading agreement;

2. Details of changes in the balance of overseas margin trading;

3. Details of payment for the use of overseas margin trading

§69. Confirmation Letter for Funds Related to Overseas Futures and Option Trading

(1) Any futures firm may, when it's customer intends to request payment guarantee to any foreign exchange bank or to remit funds to a foreign country for the use related to overseas futures and options trading in accordance with the form to be determined by the Governor. <Amended December 29, 2000>

(2) Every futures firm shall keep the following data for at least five years from the base date: <Amended December 29, 2000>

1. Details of issuance of confirmation letters for funds related to overseas futures and options trading; and

2. Copies of issued confirmation letters for funds related to overseas futures and options trading.

§70. Deadline for Depositing Customer Margin or Settlement Money

Any futures firm shall, when there occurs any reason for depositing customer margin or settlement money in the account of any customer conducting overseas futures and options trading, set the deposit deadline at a time prior to the payment deadline designated by the overseas market, overseas futures market members, or overseas futures brokers. <Amended December 29, 2000>

CHAPTER VI.

REPORTING, DELEGATION AND COMMISSION OF POWERS

§71. Reporting

(1) Every futures firm shall, in the following cases, report the details concerned to the Governor without delay: <Amended December 29, 2000>

1. Cases falling under Article 41-2 of the Act or Article 11 of the Decree;

2. Cases where the number of shares owned by its principal investors is changed or any situation stipulated under Article 11 subparagraph 1 or 2 of the Decree or corresponding thereto has occurred to any principal investors;

3. Cases of changes in capital stock;

4. Cases of becoming a party to a suit that may significantly affect its business;

5. [Deleted on December 29, 2000] ;

6. Cases where it receives the disposition for tax arrears or punishment due to the violation of tax laws;

7. Cases of failure in performing any liabilities to the futures exchange;

8. Cases where it adopts a resolution on the merger with another company or on the assignment or assumption of business; <Amended December 29, 2000>

9. to 11. [Deleted on December 29, 2000];

12. Cases where it obtains a membership of an overseas futures market; and

13. Cases where any matter, that may significantly influence its management, has occurred.

(2) Every futures firm shall report every day to the Governor the following information as of the close of the immediately preceding trading day: <Amended December 29, 2000>

1. Balance of customer's deposits;

2. Amount of each subparagraph of Article 57 paragraph (1);

3. Amount uncollected from customers:

4. Number of the futures and options trading accounts of the customers required to make an additional deposit of customer margin or settlement money; and

5. Sum of the customer margin and settlement money to be additionally deposited by customers.

(3) Every futures firm shall report the following information to the Governor every month: <Amended December 29, 2000>

1. Trading record and toss and groin of derivative contracts for its own or customer' accounts for the month;

2. Number of the customers holding any futures and options trading account as of the end of the month; and

3. Brokerage commission received for the month.

(4) Any futures firm shall, when the trading volume of futures or option contracts for its own or the same customer's accounts exceeds the level to be determined by the Governor, report the following information to the Governor: <Amended December 29, 2000>

1. Account number;

2. Trading details and loss and groin for each series;

3. Details of open interest held;

4. In the case of overseas futures and options trading, details of sending and collecting foreign currency and of overseas trading with credit; and

5. Other information to be determined by the Governor.

(5) Every depository institution shall report the following information to the Governor: <Amended December 29, 2000>

1. Balance of the deposits in the exclusive account for customer's deposits of each futures firm at the close of each trading day;

2. Monthly management details of the deposits in the exclusive account for customers' deposits;

3. Management details and results of the deposits in the exclusive account for customers' deposits by half-year and closing period; and

4. Data to be demanded by the Governor for the confirmation of the custody status or management status of the deposits in the exclusive account for customers' deposits.

(6) The method, deadline, and form of the reports pursuant to the provisions under paragraph s(1) through (5) shall be determined by the Governor.

§72. Publication of Information on Futures Firms

The Governor may, when necessary for the maintenance of soundness in futures business or for the protection of investors, demand any futures company to publicize the information on such futures company in Article 71 paragraph (1) in the press or directly publicize such information through the press. <Amended December 29, 2000>

§73. Power of Emergency Measures by the Chairman of the FSC

The Chairman of the FSC may, when deemed necessary for the removal of confusion in the futures trading market caused by a drastic change in the market situation, the prevention of unfair transactions, or the protection of investors, take any of the following actions: <Amended December 29, 2000>

1. Establishment of ceilings by series on the futures or option contracts to be conducted by any futures company for its own account or customer's account or ceilings on holding of open interest;

2. Establishment or ceilings by series on a customer's entrustment or futures or option contracts to any futures company or ceilings on holding of open interest; and

3. Order of providing information on any party which has traded futures or option contracts with any futures company in an amount exceeding a specified level or holds open interest.

§74. Administration of Delinquents

The Association may, when necessary for the sound development of the futures industry, establish and apply the guidelines on the following matters: <Amended December 29, 2000>

1. Administration of delinquents; and

2. Integrated administration of records of disciplines upon the persons engaged in the futures business.

§75. Delegation and Commission of Powers

(1) The Governor may commission to the Association any of the following powers, from among those under this Regulation:

1. Power to receive reports on the information under Article 71 paragraph (2) subparagraphs 1 through 5, to determine the deadline for reporting, and to formulate reporting forms, etc, with respect to non-exchange members; and

2. Power to receive reports on the information under Article 71 paragraph (3) subparagraph 1 to 3, to determine the deadline for reporting, and to formulate reporting forms,

(2) The Governor may commission, with respect to the exchange members, to the futures exchange the power to receive reports on the information under Article 71 paragraph (2) subparagraph 1 to 5, to determine the deadline for reporting, and to formulate reporting forms,

(3) The association and the futures exchange shall, when they have taken any action based on the powers commissioned in accordance with the statutes, promptly report the contents of such action to the Governor.

(4) The Governor may, when necessary for the maintenance of fairness in the market or for the protection of customers, take any of the following actions upon the Association or the futures exchange.

1. Demand to report the current status of entrusted business;

2. Demand to improve entrusted business; and

3. Withdrawal of commissioned powers.

(5) The Governor may apply mutatis mutandis the measures taken by the Association or the futures exchange based on the powers commissioned under the statutes to any futures firm which is not a clearing member of the Association or to non-exchange members. <Amended December 29, 2000>

§76. Duty to Observe Secrecy

No officer or employee of the FSS and the institutions to which the powers are commissioned by the Governor shall disclose the information obtained pursuant to this Regulation. However, this provision shall not apply to the following cases: <Amended December 29, 2000>

1. Provision of information in accordance with the statutes;

2. Cases as otherwise stipulated under this Regulation;

3. Provision of statistical data not carrying the name of a futures company or customer;

4. Provision of data carrying the name of a futures company which has consented the disclosure of such data; and

5. Provision of data carrying the name of a customer who has consented the disclosure of such data.

CHAPTER VII.

SUPPLEMENTARY PROVISIONS

§77. Demand to Submit Data

(1) The Governor may, when deemed necessary for the confirmation of adequacy of a report on adjusted net capital ratio, report on ratio of liabilities to assets, and other information reported or filed by any futures firm pursuant to the provisions of this Regulation, demand such futures firm to submit evidence or other necessary data, or request an access to the books thereof, <Amended December 29, 2000>

(2) Any futures firm demanded by the Governor to submit data pursuant to the provisions under paragraph (1) shall promptly comply with such demand in ways as designated by the Governor, and any futures firm, when requested to allow viewing of any books, shall submit such books to the FSS or allow any officials of the FSS to view such books freely at the locations where they are placed. <Amended December 29, 2000>

§78. Business Assistance

The Governor shall assist the FSC with its duties in the following manner:

1. Receipt of declarations, applications for approval, reports for the FSC;

2. Drafting of agenda for resolutions, reports, etc, for the FSC;

3. Execution of the regulations or decisions of the FSC; and

4. Administration of other commissioned matters by the FSC

§79. Detailed Provisions

The Governor may stipulate the detailed provisions necessary for the implementation of this Regulation, and the examples for questions regarding this Regulation.

Addenda

(April 22, 1999)

§1. Effective Date

This Regulation shall be effective on April 22, 1999.

§2. Regulations to be Repealed

The Regulation on Overseas Futures Trading and the Regulation on Accounting Procedures for Futures Trading Companies shall be repealed .

§3. Relations with Other Regulations

When other statutes cite the previous Regulation on Overseas Futures Trading or the Regulation on Accounting Procedures for Futures Trading Companies at the time of enforcement of this Regulation, and the provisions corresponding thereto are found in this Regulation, it shall be deemed that such statutes are citing the corresponding provisions in this Regulation instead of those from the previous Regulation.

§4. Applicability to Accounting Procedures

The provisions of Chapter Ⅱ shall apply to the fiscal year on which the effective date of this Regulation belongs. However, the comparative financial statements pursuant to Article 5 paragraph (1) shall apply to those of the following fiscal year thereof.

§5. Interim Measure on Restriction on Individual Asset Management

In case any futures firm has extended monetary loans to any person having a special relationship or has contracted OTC derivative contracts therewith or has provided any credit or liabilities guarantee for others as of the effective date of this Regulation, Article 37 paragraphs (3) and (4), Article 38 and Article 39 shall not apply to such transactions by the period, whichever comes earlier, between one year from the effective date of this Regulation and the contract period thereof.

§6. Exceptions to Restriction on Individual Asset Management

In case any futures firm violates Article 37 paragraph (1) or (2) as of the effective date of this Regulation, such company shall remove such violation within six months from the effective date of this Regulation.

§7. Exceptions to Risk Management Guidelines

Every futures firm shall report its risk management guidelines pursuant to Article 40 paragraph (3) within three months from the effective date of this Regulation.

§8. Exceptions to Separate Custody of Customer's Property

Every futures firm shall complete the separate custody of customer's property pursuant to the provisions of Section 4 of Chapter IV within 30 days from the effective date of this Regulation.

§9. Interim Measure on Establishment of Futures and Options Trading Accounts

(1) Any contract on establishing an account for overseas futures trading that has been concluded before the enforcement of this Regulation shall be deemed the futures and options trading contract pursuant to Article 47 only if such futures trading company completes the procedure for delivery of a risk disclosure statement pursuant to Article 46 and enters into an agreement with a customer by using the agreement iota account establishment pursuant to Article 47.

(2) Notwithstanding Article 47 paragraphs (2) and (3), for the first 15 days from the effective date of this Regulation, the deadline for reporting of standard account establishment agreement or an individual account establishment agreement shall be the scheduled date of enforcement thereof.

§10. Interim Measures on Risk Disclosure Statement

(1) The risk disclosure statement for overseas futures trading formulated pursuant to the previous Regulation on Overseas Futures Trading shall be deemed the risk disclosure statement for overseas futures and options trading pursuant to Article 65.

(2) In case a risk disclosure statement for overseas futures trading has been delivered pursuant to the previous Regulation on Overseas Futures Trading, it shall be deemed that such statement has been delivered pursuant to this Regulation.

Addenda

(December 29, 2000)

§1. Effective Date

This Regulation shall be effective on the date of promulgation.

§2. Relations with Other Regulations

On the effective date of this Regulation, the Regulation on Supervision of Foreign Exchange Business shall not apply to future business companies.

Addendum

(January 19, 2001)

This Regulation shall be effective on the date of promulgation.

Addendum

(April 27, 2001)

This Regulation shall be effective on the date of promulgation.

Addendum

(Jun 29, 2001)

This Regulation shall be effective on the date of promulgation.

Addendum

(July 3, 2001)

This Regulation shall be effective on the date of promulgation.

Addendum

(October 4, 2001)

This Regulation shall be effective on the date of promulgation.

Addendum

(December 19, 2001)

This Regulation shall be effective on January 1, 2002

Addendum

(May 1, 2002)

This Regulation shall be effective on the date of promulgation.