International investors in Korea have been baffled and
frustrated in recent months by what they see as restrictive
national policies on foreign capital and trade. Despite the Korean
government's denials, investors say the new stance is inconsistent
with the open-arms approach the crisis-hit economy of the late
1990s took towards private equity funds.
But amid the standoff, bankers booking derivatives, repurchase
and securities lending business remain generally at ease, pleased
even, about their prospects. Now that the National Assembly has
finally passed the country's consolidated insolvency law (to take
effect in March 2006, one year after its promulgation), bankers'
biggest concerns about trading with Korean counterparties will soon
be dispelled. After several years and reams of draft legislation,
the law promises foreign banks the legal certainty over close-out
netting and collateralization they have been struggling for.
Members of the International Swaps and Derivatives Association
(Isda) are pleased to see close-out netting...