On April 23, Korea Exchange published a disclosure report on the implementation of the international standards contained in the CPSS-IOSCO principles for financial market infrastructures.
The 98-page report describes the exchange's compliance with each principle in the PFMI standards and outlines several areas where further work is pending. Implementation and compliance with the PFMI standards will assist KRX in seeking recognition and equivalence in the EU and the U.S.
The report notes that KRX is in the process of changing the default waterfall for exchange-traded products. The proposed amendments, which require changes to Korean law, include a “skin in the game” provision so that funds from KRX are used before contributions from non-defaulting members. The bill containing these amendments was introduced to Parliament earlier this year and is expected to pass in the coming months.
The report also covers the implementation of stress testing and default procedure testing and the enhancement of the clearinghouse's risk management infrastructure.