「자본시장과 금융투자업에 관한 법률」상 장외파생상품 개념에 관한 고찰

Abstract

The Capital Market and Financial Investment Business Act(the “CMFIBA”), to become effective early 2009, will introduce a comprehensive regulatory system on the OTC derivatives products. For purposes of such regulation, the CMFIBA attempts to surmount a difficulty in defining the ever-changing and variable OTC derivatives, using two different approaches at the same time: Top-down Tiered approach and Building-block approach. According to the Top-down Tiered approach, an “OTC derivatives product” means (i) a “financial investment product”(that is a right that an investor obtains as a result of his/her/its agreement to pay money, etc. currently or in the future for profits or to avoid losses and there exists a risk that the purchase price exceeds the returns) (ii) that is not a “security”(accordingly the investor should be obligated to pay money, etc. in addition to the purchase price that he/she/it has paid at the time of the acquisition of the product) and (iii) that is not traded on an exchange. On the other hand, according to the Building-block approach, an “OTC derivatives product” means a contractual right under one of the three contract types: forward, option and swap, each in extremely simplified terms. This Article focuses on the under-inclusiveness of the “OTC derivatives product” definition under the CMFIBA. Part II of this article goes through the meaning of the OTC derivatives generally accepted in the market and emphasizes that there is essentially no limit on the types or terms of OTC derivatives. Besides presenting some basic building-blocks of the OTC derivatives, it points out that parties to an OTC derivatives transaction are not bound by such building-block concepts when they formulate a product to satisfy their financial needs. Part III of this article analyzes the definition of the “OTC derivatives product” pursuant to both approaches under the CMFIBA(Top-down Tiered approach and Building-block approach). It argues that the criteria under both approaches are unclear and sometimes it is hard to interpret them consistently. Also the Building-block approach would not be flexible enough to accommodate every possible OTC derivatives. Furthermore, there is no assurance that one approach would not conflict with another approach. Part IV shows examples of typical OTC derivatives in the market(including NDF, rate swap, cap, collar, corridor, swaption, KIKO and CDS) in order to verify the arguments and concerns raised in Part III. It turns out that the approaches adopted by the CMFIBA do not work in most cases, as expected through logical analysis of the criteria thereunder in Part III. Based upon the foregoing analysis and practical tests, Part V concludes that the definition of the “OTC derivatives product” under the CMFIBA is under-inclusive and therefore it is necessary to amend the CMFIBA in this regard. This Article proposes that (i) the CMFIBA should scrap the Top-down Tiered approach. Rather it should first define each of the “security” and “OTC derivatives product” through reference to its generic nature and thereafter the sum of the two should constitute the “financial investment product”; (ii) the function of the additional payment requirement that currently classifies “OTC derivatives product” from “security” in general should be confined to discern certain products that has mixed features(eg. hybrid instruments); and (iii) the CMFIBA should reinforce the Building-block approach by extending the list of building-blocks constituting the “OTC derivatives product” to allow combination of, and variation, to the basic building-blocks, and should also reflect the prevailing market practice of using ISDA master agreement or similar standardized forms in defining the term.