South Korea financial risk regulation updates

South Korea’s Financial Supervisory Service (FSS) is implementing new regulatory measures to manage financial risk and enhance investor protection.

In August 2026, the FSS announced a one-year extension of guidelines for the margin exchange system concerning non-centrally cleared over-the-counter (OTC) derivatives. This system requires counterparties to exchange collateral to mitigate default risks and systemic instability. The extension, running from September through August of the following year, will see an increase in the number of financial institutions subject to initial margin and variation margin requirements.

Following this, the FSS announced a ‘Standardized Core Risk Plan’ for public offering funds, effective September 30. Aimed at preventing misunderstandings after significant losses in overseas real estate funds, the regulations require financial institutions to clearly disclose ‘principal loss risk’ for ten specific fund types, including REITs, leverage, and inverse funds. Asset managers must also disclose their history of large-scale losses, specifically if losses exceeded 20% in similar products.