South Korea: Requirements for account opening with Legal Entity Identifier (LEI)
Clearstream Banking1 informs clients that effective
14 December 2023
the Financial Supervisory Services (FSS) in South Korea will stop issuing new Investment Registration Certificates (IRCs) to foreign investors and the requirement to apply for an IRC will be abolished.
With this change, foreign investors who are entering the South Korean market for the first time will need a Legal Entity Identifier (LEI) to open accounts in the market.
Foreign investors who already have an IRC number must continue to use this number to open accounts in the market and cannot substitute it with the LEI.
Impact on clients
Investor identification and account opening
To settle and safekeep South Korean securities, clients are requested to take note of the following requirements:
1. Obtention of a Legal Entity Identifier
Foreign investors (excluding individual investors) without an IRC number are required to obtain an LEI before investing in South Korean securities.
Exception: Foreign investors who already have an IRC number must continue to use this number and cannot substitute it with the LEI or any other identification method.
2. Account opening requirements
Clients of Clearstream Banking who wish to hold South Korean securities must open the related sub-account in HSBC’s books. The LEI and underlying safekeeping account are used in all trading, settlement and reporting activities.
Note: Account opening for beneficial owners that are individuals will not be accepted. Clients should note that access to this market is subject to conditions and criteria which will be assessed on a case-by-case basis. Please contact your Relationship Manager to confirm or make the necessary arrangement, in case of doubt. Clearstream Banking reserves the right to revoke a client’s access to the market in the event that such conditions and criteria are not fulfilled.
Exception: Foreign investors who already have an IRC number must continue to use this number to open the related sub-account in HSBC’s books. In this case, the IRC number and underlying safekeeping account are used in all trading, settlement and reporting activities.
Documents must be submitted in English and all appendices to be completed must be printed on the applicant’s letterhead.
The following is required from the CBL client to open the related sub-account in HSBC’s books:
Note: For versions of the below-mentioned forms, see the attachments to this Announcement.
- The required Information/Acknowledgment of the foreign investor for account opening;
- A Power of Attorney signed by the investor (or by its mandated representative) appointing HSBC as Standing Proxy. If the Power of Attorney is signed by a mandated representative, it must be accompanied by a copy of the document that authorises the representative to sign the Power of Attorney on behalf of the investor. The Power of Attorney must be notarised by a public notary;
- A Consent to Provision of Financial Transaction Information signed by the investor;
- An Identification of Beneficial Owner signed by the investor.
Note: The Information/Acknowledgement of the foreign investor for the account opening, Power of Attorney, Consent letter and Identification of Beneficial Owner must be signed by the same person(s).
- A copy of the supporting document – e.g. certificate of incorporation (COI), trade registry extract or official filing – submitted at the time of LEI application or official documents (e.g. COI and/or equivalent documents) issued within one year by government institutions, which prove the legal existence of the investor, exact name of the LEI, establishment date and business classification of the investor. The copy of the document must be a certified true copy and notarised by a notary public in the same jurisdiction that the document is issued.
Note: No supporting document is required when using an existing IRC number to open the related sub-account in HSBC’s books.
If the investor is not a direct Clearstream Banking client, the client must provide the duly signed “Contact Confirmation Letter”.
Clients must submit the above-mentioned forms and supporting documents via Clearstream Banking and address them to:
Clearstream Banking S.A. Singapore Branch
Settlement Operations
9, Raffles Place
#55-01 Republic Plaza
Singapore 048619
Additionally, clients must send a Swift MT599 free-format message with the following details to:
QUOTE
Attn: Settlement Singapore
Kindly assist to open securities and KRW/USD cash accounts with HSBC Limited, Seoul Branch for the below client:
CBL Account Number:
UBO Name:<insert name of UBO as per existing IRC or registered LEI>
IRC Number: <insert existing IRC number, if applicable>; or
Legal Entity Identifier: <insert UBO LEI, if there is no existing IRC number>
UNQUOTE
The account opening process will generally take up to six business days after the CBL client has provided the relevant information.
If the application is satisfactory, HSBC will open in their books one Korean Won (KRW) cash account exclusively for securities investment, one USD cash account exclusively for securities investment and one safekeeping account in the name of the applicant. CBL will communicate the underlying accounts to the CBL client. The client’s account in CBL will not be eligible to invest in South Korean securities before opening the relevant cash and safekeeping accounts exclusively for securities investment with HSBC.
The safekeeping account must always be mentioned in the client’s settlement instructions so that it can be transmitted to HSBC.
Clients are liable for the usage of any safekeeping accounts obtained through CBL and HSBC. Clearstream Banking shall bear no responsibility for any illegitimate or erroneous use – for any trading or other purpose – of such safekeeping accounts. CBL does not validate whether the safekeeping accounts that clients use in their settlement instructions sent to CBL represent the legitimate investor who ordered the underlying transaction. Clearstream Banking shall therefore not be responsible if a client uses a safekeeping account belonging to an investor other than the investor on whose behalf the relating transaction has been or was deemed to be executed or settled.
Procedures for domestic counterparties
Procedure for the domestic counterparty | Deadline |
KSD-eligible securities | |
Clients delivering/receiving securities to/from the South Korean market must request their domestic counterparty to receive/deliver the securities from/to the account of the IRC holder or LEI holder with HSBC Seoul as follows:
| Market deadline |
Note: Counterparties must quote the IRC number (6-digit IRC number) of the IRC holder, LEI (20-character alpha-numeric code) of the LEI holder or account number (002-nnnnnn-421, where nnnnnn is six digits) of the IRC/LEI holder with HSBC Seoul.
Further information
The Market Link Guide – South Korea will be updated accordingly.
For further information, clients may contact Clearstream Banking Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG clients using Creation accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.