Presidential Decree No. 31193, Nov. 24, 2020
| Article 1 (Purpose) |
| Article 2 (Scope of Financial Company or Institution) |
| 1. | A community credit cooperative and the Federation under the Community Credit Cooperatives Act; |
| 2. | A postal service agency under the Postal Savings and Insurance Act; |
| 3. | Other institutions determined and publicly notified by the Financial Services Commission that use financial benchmarks in financial transactions. |
| Article 3 (Operational Rules for Calculation) |
| (1) | An operational rule for calculation under Article 5 (2) 4 of the Act (hereinafter referred to as "operational rule for calculation") shall include the following matters: |
| 1. | The following matters relating to critical benchmarks: |
| (a) | Contents and detailed description of critical benchmarks; |
| (b) | Methods and procedures for calculating critical benchmarks; |
| (c) | Contents and detailed description of basic data (referring to data such as figures, quotes, appraised values, or estimates based on market transactions; hereinafter the same shall apply) related to critical benchmarks; |
| (d) | Standards for selecting basic data related to critical benchmarks (hereinafter referred to as "input data") and the methods and procedures for calculating said data; |
| (e) | Financial transactions based on which input data are calculated; |
| (f) | Explanations of the circumstances in which it is difficult to apply the general methods and procedures to the process of calculating critical benchmarks, and the standards and procedures for calculating critical benchmarks in the relevant situation; |
| (g) | Frequency and methods of publishing critical benchmarks; |
| (h) | Where a distortion, manipulation, or error is found in the process of calculating critical benchmarks, procedures for correction thereof; |
| (i) | Where important changes occur in the methods and procedures for calculating critical benchmarks, the details of such changes and procedures for handling said changes; |
| (j) | Contingency plans in the event of a disruption to the process of calculating critical benchmarks; |
| (k) | Examples of cases where the validity or credibility of the calculation of relevant critical benchmarks is likely to be impaired due to, among other reasons, insufficient input data and lack of liquidity in related markets, and an explanation of those examples; |
| (l) | Where changes in the methods for calculating critical benchmarks shall be made periodically to maintain representativeness of said benchmarks, the reasons for such changes, and basis for determining the frequency of the changes; |
| 2. | The following matters regarding a critical benchmark statement: |
| (a) | Details, explanation, and use of critical benchmarks; |
| (b) | Contents and detailed description of input data, and criteria for selecting input data; |
| (c) | Methods and procedures for calculating critical benchmarks; |
| (d) | Where a distortion, manipulation, or error is found in the process of calculating critical benchmarks, procedures for correction thereof; |
| (e) | Where important changes occur in the methods and procedures for calculating critical benchmarks, the details of such changes and the possible impact said changes may have on financial contracts; |
| (f) | Circumstances that can lead to cessation of the calculation of critical benchmarks and the possible impact said cessation may have on financial contracts; |
| (g) | Contingency plans in the event of a disruption to the process of calculating critical benchmarks; |
| (h) | Where important changes occur in the methods and procedures for calculating critical benchmarks, procedures through which such changes can be swiftly incorporated into the critical benchmark statement; |
| (i) | History of changes in the case of a change to the critical benchmark statement; |
| 3. | The following matters regarding the management of conflicts of interest by administrators of critical benchmarks and their internal control systems: |
| (a) | Organizational structure and division of duties among divisions in charge of calculation; |
| (b) | Methods and procedures to identify, manage, and prevent conflicts of interest that may arise in the process of calculating critical benchmarks; |
| (c) | Roles that executive officers, supervisory or audit division, or the critical benchmark management committee under Article 6 (1) of the Act shall play in relation to internal control; |
| (d) | Matters relating to the composition and operation of human resources and organizations having expertise to manage and supervise compliance with the methods and procedures for calculating critical benchmarks with respect to internal control; |
| (e) | Procedures for periodically inspecting internal control systems; |
| (f) | Methods and procedures for verifying whether executive officers and employees observe the internal control standards and measures against executive officers and employees who violate the internal control standards; |
| (g) | Measures for preventing violations, etc. of internal control standards by executive officers and employees; |
| (h) | Methods and procedures for handling whistleblowing related to distortion or manipulation, etc. of critical benchmarks; |
| (i) | Advance or ex post methods to verify input data suspected of distortion, manipulation, or error, etc.; |
| (j) | Procedures of publication and opinion-gathering related to changes in the methods and procedures for calculating critical benchmarks; |
| (k) | Remuneration system for staff in charge of calculating critical benchmarks and matters related thereto; |
| 4. | The following matters relating to the standards and procedures with which an institution that performs duties related to the submission of input data (hereinafter referred to as "contributor of input data") shall comply: |
| (a) | Requirements of contributors of input data and procedures for selecting them; |
| (b) | Procedures for preserving and providing input data; |
| (c) | Matters relating to the qualifications, roles, and responsibilities of, and training for persons in charge of submission; |
| (d) | Internal control standards for controlling and supervising, among other things, compliance with the procedures for submission; |
| (e) | Methods and procedures by which administrators of critical benchmarks can verify personal information of persons in charge of submission; |
| (f) | Explanation of the circumstances in which it is difficult to apply general methods and procedures to the process of submitting input data and the standards and procedures to be complied with in submitting input data under the relevant circumstances; |
| (g) | Internal reporting procedures where input data suspected of distortion, manipulation, or error, etc. are found; |
| (h) | Methods and procedures to identify, manage, and prevent conflicts of interest that may arise in the process of submitting input data; |
| 5. | The following matters relating to the methods of managing and supervising submission: |
| (a) | Matters relating to the inspection and examination of submission by contributors of input data; |
| (b) | Frequency and methods of the management and supervision of contributors of input data; |
| (c) | Measures that shall be taken by administrators of critical benchmarks where contributors of input data violate the standards and procedures under subparagraph 4; |
| 6. | The following matters relating to the methods and procedures for calculating critical benchmarks, if such affairs are entrusted: |
| (a) | Matters relating to information about entrustment, such as a trustee's trade name and title, and the contents and scope of entrusted affairs; |
| (b) | Matters relating to reporting to a trustor, if a trustee changes the way in which he or she conducts business affairs; |
| (c) | A code of conduct a trustee shall adhere to when handling entrusted affairs; |
| (d) | Methods to confirm whether a trustee adheres to the code of conduct under item (c); |
| (e) | Assessment of potential risks associated with entrustment of affairs; |
| (f) | Measures that shall be taken by administrators of critical benchmarks where it is impracticable or difficult to handle entrusted affairs; |
| 7. | Other matters determined and publicly notified by the Financial Service Commission that shall be included in the operational rules for calculation. |
| (2) | A person who intends to obtain approval for operational rules for calculation pursuant to Article 5 (2) 4 of the Act shall file with the Financial Services Commission an application determined and publicly notified by the Financial Services Commission, accompanied by the operational rules for calculation. |
| (3) | The Financial Services Commission shall determine whether to approve the operational rules within three months of receiving the application under paragraph (2), and shall, without delay, notify the applicant of its decision and grounds for such decision in writing. |
| (4) | If there is any defect in the application documents submitted under paragraph (2), the Financial Services Commission may request supplementation. In such cases, the period required for the supplementation shall not count toward the period prescribed in paragraph (3). |
| Article 4 (Designation of Administrators of Critical Benchmarks) |
| (1) | An entity which intends to obtain designation as an administrator of a critical benchmark under Article 5 (1) of the Act shall file an application stating the following matters with the Financial Services Commission within one month from the date operational rules for calculation are approved under Article 3, as determined and publicly notified by the Financial Services Commission: |
| 1. | The entity's name; |
| 2. | Location of its main office; |
| 3. | Matters relating to its executive officers; |
| 4. | Matters relating to its financial status, including equity capital; |
| 5. | Matters relating to its human resources, facilities, equipment, etc.; |
| 6. | Division of duties and organizational structure; |
| 7. | Matters relating to the composition and operation of the critical benchmark management committee under Article 6 (1) of the Act. |
| (2) | The following documents shall be attached to the application under paragraph (1): |
| 1. | Its articles of incorporation or other equivalent regulations; |
| 2. | A document stating the address of the main office; |
| 3. | Resumes and career certificates of executive officers; |
| 4. | Operational rules for calculation approved by the Financial Services Commission (excluding cases where an application is submitted pursuant to the proviso, with the exception of the subparagraphs, of paragraph (1)); |
| 5. | Financial statements and supplementary schedules for the three most recent business years (a corporation in the process of incorporation is exempt from providing the same; and a corporation shall submit financial statements and supplementary schedules for the business years since its incorporation, if three business years have not passed since said incorporation); |
| 6. | A list of shareholders and employees, or a list corresponding thereto as of the date of application; |
| 7. | Other documents determined and publicly notified by the Financial Services Commission as necessary for designating administrators of critical benchmarks. |
| (3) | Upon receipt of an application under paragraph (1), the Financial Services Commission shall verify the corporation registration certificate through administrative data matching under Article 36 (1) of the Electronic Government Act. |
| (4) | The Financial Services Commission shall determine whether to designate an administrator of a critical benchmark within three months of receiving said application under paragraph (1), and shall, without delay, notify the applicant entity of its decision and grounds for such decision in writing. |
| (5) | Where there is any defect in the application documents under paragraph (1) or (2), the Financial Services Commission may request supplementation, and may request other institutions to provide necessary data to verify whether the documents submitted meet the requirements under the subparagraphs of Article 5 (2) of the Act. In such cases, the period taken for supplementation and the period taken for receiving data from other institutions shall not count toward the period under paragraph (4). |
| Article 5 (Composition and Operation of the Critical Benchmark Management Committee) |
| (1) | The critical benchmark management committee under Article 6 (1) of the Act (hereinafter referred to as the "Committee") shall be comprised of at least five members, including one chairperson. |
| (2) | Members of the Committee shall be persons who have expert knowledge and experience necessary to ensure the validity and reliability of critical benchmarks. In such cases, at least two members from among a majority of members and external members (referring to persons who are not executive officers or employees of any administrator of a critical benchmark) shall be those who are not potentially subject to conflicts of interest in connection with the calculation of critical benchmarks. |
| (3) | No executive officer or employee of an administrator of a critical benchmark and of a contributor of input data shall become the chairperson. |
| (4) | Members of the Committee shall not participate in deliberation and decision on any matter in which they have an interest. |
| (5) | Other matters necessary for the composition and operation of the Committee shall be prescribed by the articles of incorporation of an administrator of a critical benchmark or by regulations corresponding thereto. |
| Article 6 (Matters to Be Deliberated on by the Committee) |
| 1. | Matters relating to a review of the appropriateness of operational rules for calculation under Article 6 (4) of the Act; |
| 2. | Matters relating to inspection of compliance with operational rules for calculation, publication of the results of said inspection, and measures to be taken in the case of a violation of operational rules for calculation under Article 6 (5) of the Act; |
| 3. | Matters relating to decision on whether to cease the calculation of critical benchmarks under Article 7 (1) and (2) of the Act; |
| 4. | Other matters determined and publicly notified by the Financial Services Commission to ensure the transparent and stable management of critical benchmarks. |
| Article 7 (Publication of Operational Rules for Calculation and Matters relating to Management of Conflicts of Interest) |
| (1) | Upon being designated as an administrator of a critical benchmark under Article 6 (3) of the Act, the administrator of a critical benchmark shall immediately publish details of operational rules for calculation and matters relating to the management of conflicts of interest on its website, etc. |
| (2) | Where there are any changes to the details of operational rules for calculation and matters relating to the management of conflicts of interest, an administrator of a critical benchmark shall, without delay, publish the details of such changes on its website, etc. |
| Article 8 (Review of Appropriateness of Operational Rules for Calculation) |
| 1. | Procedures for calculating and determining critical benchmarks; |
| 2. | An organization responsible for reviewing and determining critical benchmarks calculated; |
| 3. | Roles of employees responsible for reviewing and determining critical benchmarks calculated and procedures for appointing and dismissing said employees. |
| Article 9 (Inspection of Compliance with Operational Rules for Calculation) |
| (1) | "Cases prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 6 (5) of the Act means any of the following cases: |
| 1. | Where an administrator of a critical benchmark or a contributor of input data enters into a financial contract related to the relevant critical benchmark or has a financial instrument; |
| 2. | Other cases determined and publicly notified by the Financial Services Commission, where an administrator of a critical benchmark or a contributor of input data may gain economic benefits through the critical benchmark. |
| (2) | "Independent institution or expert prescribed by Presidential Decree" in the proviso, with the exception of the subparagraphs, of Article 6 (5) of the Act means any of the following institutions or experts: |
| 1. | A certified public accountant or an accounting corporation registered under Article 24 of the Certified Public Accountant Act; |
| 2. | An audit team under subparagraph 7 (b) of Article 2 of the Act on External Audit of Stock Companies; |
| 3. | An attorney-at-law; a law firm under Article 40 of the Attorney-at-Law Act; or a limited liability law firm, a law firm partnership, or law office under Articles 58-2, 58-18, and 89-6 (3), respectively, of the same Act. |
| Article 10 (Data to Be Recorded and Retained) |
| 1. | In the case of a contributor of a critical benchmark: |
| (a) | Data which record important changes in the methods and procedures for submitting input data; |
| (b) | Data and supporting data submitted to an administrator of a critical benchmark; |
| (c) | Data regarding the qualifications and roles of, and personal information about persons in charge of submission; |
| (d) | Where input data have been submitted in accordance with the standards and procedures under Article 3 (1) 4 (f), data verifying the details thereof; |
| 2. | In the case of an administrator of a critical benchmark: |
| (a) | Input data and other data used to calculate the critical benchmark; |
| (b) | Data on the qualifications and roles of and personal information about persons in charge of calculation; |
| (c) | Data which record the results of calculating the critical benchmark; |
| (d) | Where the critical benchmark is calculated in accordance with the standards and procedures under Article 3 (1) 1 (f), data verifying the details thereof; |
| (e) | In the case of a cessation of the calculation, data relating to details of measures to be taken in accordance with a contingency plan; |
| 3. | In the case of a user of a critical benchmark (referring to a financial company or institution which uses the critical benchmark in financial transactions; hereinafter the same shall apply): |
| (a) | Statistics on financial transactions using the critical benchmark; |
| (b) | The critical benchmark statement under Article 5 (2) 4 (a) of the Act and data on the distribution thereof; |
| (c) | Data about financial contracts reflecting the contingency plan under Article 9 (2) of the Act. |
| Article 11 (Measures to Be Taken in Cases of Cessation of Calculation of Critical Benchmarks) |
| 1. | An order to publish matters requiring attention when using critical benchmarks on the website, etc. of administrators of critical benchmarks; |
| 2. | Measures requiring, among others, users of critical benchmarks to provide guidance on financial benchmarks that can replace the relevant critical benchmarks; |
| 3. | Measures to inform financial consumers, etc. of the fact that cessation of the calculation of critical benchmarks may have an impact upon financial contracts; |
| 4. | Other measures determined and publicly notified by the Financial Services Commission for the protection of financial consumers and the stability of financial markets. |
| Article 12 (Use of Critical Benchmarks) |
| (1) | “Financial contract prescribed by Presidential Decree” in Article 9 (1) of the Act means any of the following financial contracts: |
| 1. | Contracts for the purposes of deposits, installment savings, and loans under the Banking Act, the Korea Development Bank Act, the Industrial Bank of Korea Act, or the Mutual Savings Banks Act and contracts for the purpose of loans under the Export-Import Bank of Korea Act; |
| 2. | Contracts for the purpose of transactions of financial investment instruments under Article 3 (1) of the Financial Investment Services and Capital Markets Act; |
| 3. | Contracts for insurance products under subparagraph 1 of Article 2 of the Insurance Business Act; |
| 4. | Contracts for the purposes of issuance of credit cards, facility leasing, deferred payment sale, and installment financing under the Specialized Credit Finance Business Act; |
| 5. | Contracts for the purpose of foreign exchange transactions under the Foreign Exchange Transactions Act; |
| 6. | Other financial contracts determined and publicly notified by the Financial Services Commission, which require protection of financial consumers. |
| (2) | “Contingency plan prescribed by Presidential Decree” in Article 9 (2) of the Act means a plan containing the following matters: |
| 1. | Selection of a financial benchmark that can replace a critical benchmark and grounds for such selection; |
| 2. | Procedures and schedule for conversion of critical benchmarks into financial benchmarks; |
| 3. | Guidance on cessation of the calculation of critical benchmarks for the other party to the financial contract; |
| 4. | Other matters determined and publicly notified by the Financial Services Commission to minimize any damage to financial consumers by cessation of the calculation of critical benchmarks. |
| Article 13 (Authority to Order Measures) |
| 1. | Matters relating to the improvement of operational rules for calculation; |
| 2. | Matters relating to qualifications of persons in charge of submission or persons in charge of calculation. |
| Article 14 (Classification of Warnings) |
| Article 15 (Criteria for Imposing Penalty Surcharges) |
| (1) | The criteria for imposing penalty surcharges under Article 13 (1) of the Act shall be as specified in attached Table 1. |
| (2) | The criteria for imposing penalty surcharges under Article 13 (2) of the Act shall be as specified in attached Table 2. |
| Article 16 (Special Cases concerning Foreign Exchange Brokerage Companies) |
| Article 17 (Entrustment of Authority) |
| (1) | Pursuant to Article 17 of the Act, the Financial Services Commission shall entrust the following business affairs to the Governor of the Financial Supervisory Service: |
| 1. | Examination of whether the requirements for designation of administrators of critical benchmarks under Article 5 (2) of the Act are met; |
| 2. | Examination of the appropriateness of approval of operational rules for calculation under Article 5 (2) 4 of the Act; |
| 3. | Receipt of a report on the cessation of calculation of critical benchmarks under Article 7 (1) and (2) of the Act; |
| 4. | Receipt of a report on the cessation of submission under Article 8 (1) and (2) of the Act; |
| 5. | The following affairs involving an institution falling under any subparagraph of Article 38 of the Act on the Establishment, etc. of Financial Services Commission: |
| (a) | Supervision and inspection under Article 12 (1) of the Act; |
| (b) | A caution or warning under Article 12 (2) 1 of the Act; |
| (c) | A disciplinary warning (limited to a disciplinary warning issued against an executive officer of any of the following financial companies or institutions) under Article 14 of this Decree, among warnings under Article 12 (2) 4 of the Act; |
| (i) | A credit service provider under subparagraph 1 (a) of Article 2 of the Act on Registration of Credit Business, etc. and Protection of Finance Users; |
| (ii) | An insurance company under subparagraph 6 of Article 2 of the Insurance Business Act; |
| (iii) | A mutual savings banks and their National Federation under the Mutual Savings Banks Act; |
| (iv) | A credit information company under Article 45 (1) 1 through 3 of the Credit Information Use and Protection Act; |
| (v) | A credit union under subparagraph 1 of Article 2 of the Credit Unions Act and the National Credit Union Federation of Korea under subparagraph 2 of the same Article (including each union deemed a credit union under Article 95 (1) of the same Act and each National Federation under paragraph (2) of the same Article); |
| (vi) | A value-added network provider under subparagraph 8-3 of Article 2 of the Specialized Credit Finance Business Act and a specialized credit finance business company under subparagraph 15 of the same Article; |
| (vii) | An online investment-linked financial business entity under subparagraph 3 of Article 2 of the Act on Online Investment-Linked Financial Business and the Protection of Users; |
| (viii) | A bank established after obtaining authorization under Article 8 of the Banking Act; |
| (ix) | An Internet-only bank under Article 2 of the Act on Special Cases concerning Establishment and Operation of Internet-Only Banks; |
| (x) | An electronic financial business entity under subparagraph 4 of Article 2 of the Electronic Financial Transactions Act; |
| (d) | A cautionary warning under Article 14 of this Decree among warnings under Article 12 (2) 4 of the Act; |
| (e) | A caution under Article 12 (2) 4 of the Act; |
| (f) | A measure under Article 12 (2) 5 of the Act; |
| 6. | Receipt of a report and examination of whether the reporting requirements are met under Article 15 (1) of the Act; |
| 7. | Request for supplementation under Article 3 (4); |
| 8. | Request for supplementation and for data under Article 4 (5). |
| (2) | The Governor of the Financial Supervisory Service shall report the results of conducting business affairs entrusted under paragraph (1) to the Financial Services Commission, as determined by the commission. |
| (3) | The Minister of Economy and Finance shall entrust the following affairs regarding foreign exchange brokerage companies to the Governor of the Bank of Korea pursuant to Articles 16 (2) 7 and 17 of the Act: |
| 1. | Examination of whether the requirements for designation of administrators of critical benchmarks under Article 5 (2) of the Act are met; |
| 2. | Examination of the appropriateness of approval of operational rules for calculation under Article 5 (2) 4 of the Act; |
| 3. | Receipt of a report on the cessation of calculation of critical benchmarks and measures to be taken under Article 7 of the Act; |
| 4. | Receipt of a report on the cessation of submission and measures to be taken under Article 8 of the Act; |
| 5. | Issuance of an order to take measures under Article 11 of the Act; |
| 6. | Supervision and inspection under Article 12 (1) of the Act; |
| 7. | Request for supplementation under Article 3 (4); |
| 8. | Request for supplementation and for data under Article 4 (5). |
| (4) | The Governor of the Bank of Korea shall report the results of conducting business affairs entrusted under paragraph (3) to the Minister of Economy and Finance, as determined by the Minister. |
| Article 18 (Management of Sensitive Information and Personally Identifiable Information) |
| (1) | The Financial Services Commission (including the Governor of the Financial Supervisory Service entrusted with the affairs of the Financial Services Commission under Article 17 (1)) may, if unavoidable to conduct the following affairs, manage data containing resident registration numbers, passport numbers, driver's license numbers, or alien registration numbers under Article 19 of the Enforcement Decree of the Personal Information Protection Act: |
| 1. | Affairs relating to the designation and cancellation of designation of critical benchmarks under Article 4 of the Act; |
| 2. | Affairs relating to the designation and revocation of designation of administrators of critical benchmarks under Article 5 of the Act; |
| 3. | Affairs relating to a report on the cessation of calculation and measures to be taken under Article 7 of the Act; |
| 4. | Affairs relating to a report on the cessation of submission and measures to be taken under Article 8 of the Act; |
| 5. | Affairs relating to an order to take measures under Article 11 of the Act; |
| 6. | Affairs relating to supervision, inspection, and administrative dispositions under Article 12 of the Act; |
| 7. | Affairs relating to the imposition of penalty surcharges under Article 13 of the Act; |
| 8. | Affairs relating to a report by foreign administrators and the revocation of designation as administrators of critical benchmarks under Article 15 of the Act; |
| 9. | Affairs relating to receipt and handling of the results of measures notified by the Minister of Economy and Finance under the latter part of Article 16 (2) of the Act; |
| 10. | Affairs relating to the imposition of administrative fines under Article 19 of the Act. |
| (2) | The Minister of Economy and Finance (including the Governor of the Bank of Korea entrusted with the affairs of the Minister of Economy and Finance under Article 17 (3)) may, if unavoidable to conduct the following affairs regarding foreign exchange brokerage companies under Article 16 of the Act, manage data containing resident registration numbers, passport numbers, driver's license numbers, or alien registration numbers under Article 19 of the Enforcement Decree of the Personal Information Protection Act: |
| 1. | Affairs relating to the designation and revocation of designation of administrators of critical benchmarks under Article 5 of the Act; |
| 2. | Affairs relating to a report on the cessation of calculation and measures to be taken under Article 7 of the Act; |
| 3. | Affairs relating to a report on the cessation of submission and measures to be taken under Article 8 of the Act; |
| 4. | Affairs relating to an order to take measures under Article 11 of the Act; |
| 5. | Affairs relating to supervision, inspection, and administrative dispositions under Article 12 of the Act; |
| 6. | Affairs relating to the imposition of penalty surcharges under Article 13 of the Act; |
| 7. | Affairs relating to consultation in the case of a designation and cancellation of designation of critical benchmarks under Article 16 (1) of the Act; |
| 8. | Affairs relating to the imposition of administrative fines under Article 19 of the Act. |
| (3) | Where unavoidable to conduct the following affairs, administrators of critical benchmarks may manage data including resident registration numbers, passport numbers, driver's license numbers, or alien registration numbers under Article 19 of the Enforcement Decree of the Personal Information Protection Act: |
| 1. | Affairs relating to the calculation of critical benchmarks; |
| 2. | Affairs relating to the composition and operation of the Committee. |
| Article 19 (Criteria for Imposing Administrative Fines) |