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...