(1) Reasons for Proposal

□ Follow up on the “Reform of Finance Industry Capital Regulations for Productive Finance” announced by the Government in January 2018
 ○ Streamline capital regulations by reducing the regulatory burden of funding in small and medium enterprises and venture businesses, and strengthening risk management in the real estate sector
 ○ Also address a number of weaknesses in the standards for calculating net capital ratio risks that have emerged since the standards were enforced in January 2016

(2) Major Provisions

(1) Strengthen the role of venture capital
○ Decrease specific risk values of KOSDAQ stocks (<Attached Table 5> §1.A.)
○ Make an exemption from stock concentration risk calculation where a brokerage firm specializing in SMEs makes a long-term investment (at least 1 year) in a small or medium enterprise or venture business (<Attached Table 5> §6.E.)
○ Make an exemption from put-back option risk calculation for bookrunners in Tesla listings* (<Attached Table 5> §19-2.)
* A special listing system in the KOSDAQ market for businesses with growth potential

(2) Strengthen the soundness of the real estate sector
○ Adjust the risk value of real estate-related collective investment securities (24% →60%) (<Attached Table 5> §14.D.)
○ Adjust the risk value of the real estate-related loans of comprehensive financial investment business entities (risk value of each party to the transaction → risk value of each party to the transaction × 150%) (<Attached Table 5> §20.)

(3) Make other improvements to the standards for calculating net capital ratio risks
○ Clarify the standards for calculating collective investment securities risks (<Attached Table 5> §14.E.)
○ Increase the scope of application of risk values of debt guarantee counterparties (<Attached Table 5> §26.)
○ Clarify the method for calculating risk values for joint compensation funds (<Attached Table 5> §28.)

(3)Amendment Details

Amendment to the Detailed Rules on the Enforcement of Financial Investment Business Regulations

Partially amend the Detailed Rules on the Enforcement of Financial Investment Business Regulations as follows.

In <Attached Table 5> Standards for Financial Investment Business Entity Risk Calculation, 1. (Method of Specific Risk Calculation for Stocks, etc.), amend <Table 1> Specific and General Risk Values of Stocks, etc., as follows.

<Table 1> Specific and General Risk Values of Stocks, etc.