Samco Co., Ltd. (Law Firm LLC, Attorneys Kim Un-soo et al., Counsel for the defendant-appellant)

Han Bank Co., Ltd. (Law Firm Sejong, Attorney Kim Chang-hwan, Counsel for defendant-appellant)

August 25, 2011

Seoul Central District Court Decision 2008Gahap131793 Decided November 29, 2010

1. The judgment of the court of first instance is modified as follows.

A. The plaintiff's main claim is dismissed.

B. The defendant shall pay to the plaintiff 345,674,00 won and 284,403,000 won among them, 5% per annum from January 14, 2009 to December 22, 201, and 20% per annum from the next day to the day of full payment.

C. The plaintiff's remaining conjunctive claims are dismissed.

2. 3/5 of the total litigation costs is assessed against the Plaintiff, and the remainder is assessed against the Defendant.

3. The above paragraph 1(b) may be provisionally executed.

Main and Preliminary, the defendant shall pay to the plaintiff 894,040,000 won with 20% interest per annum from the day following the delivery of a copy of the complaint of this case to the day of complete payment.

1. The plaintiff;

Of the judgment of the first instance, the part against the Plaintiff seeking additional payment shall be revoked. The Defendant shall pay to the Plaintiff 549,016,000 won with 20% interest per annum from the day after the delivery of the copy of the complaint of this case to the day of complete payment.

2. The defendant;

The part of the judgment of the first instance against the defendant shall be revoked, and the plaintiff's claim corresponding to the revocation shall be dismissed.

1. Quotation of the first instance judgment

The reasoning of the court's reasoning concerning this case is as follows 2. : (a) additional determination as to the plaintiff's argument is added to the following 3. ; (b) additional determination as to the defendant's argument is added to the defendant's argument, and (c) No. 57 No. 14 of the judgment of the court of the first instance as to the plaintiff and the defendant's ground of the judgment of the first instance (i.e., the part as to Esti and Msti Co., Ltd. and the National Bank of the first instance Co., Ltd. and the Co., Ltd. of the first instance Co., Ltd.) is identical to the part as to the plaintiff and the defendant'

2. Additional determination as to the Plaintiff’s assertion

(a) the unfairness of the contract and the avoidance of exchange risk due to the imbalance of options;

1) Summary of the Plaintiff’s assertion

The instant currency option contract concluded between the Plaintiff and the Defendant constitutes an imbalance between the theoretical value of put options and the theoretical value of put options, which is unfair and inappropriate for avoiding exchange risk, as unilaterally unfavorable to the Plaintiff.

2) Determination

In full view of the purport of the argument in Gap evidence 3, Eul evidence 10, 11 (including virtual numbers, hereinafter the same), it is recognized that the theory of put options acquired by the plaintiff in the currency option contract on December 20, 207 is about 12,349, the theory of put options acquired by the defendant is about 3,390, and the theory of put options acquired by the plaintiff in the currency option contract on January 23, 2008 is about 10,096, the theory of put options acquired by the defendant is about 57,485.

However, a foreign currency option contract of this case where a foreign currency option contract of this case was put into a foreign currency option contract of this case where a foreign currency option contract of this case was put into a foreign currency option contract of this case where a foreign currency option contract of this case where a foreign currency option contract of this case was put into a foreign currency option contract of this case where the foreign currency exchange rate was higher than the exchange rate at which the foreign currency option contract was put into a foreign currency option contract of this case and was lower than the former foreign currency exchange rate, and thus, the foreign currency option contract of this case was put into a foreign currency option contract of this case where the foreign currency option contract of this case was put into a foreign currency option contract of this case where the foreign currency option contract of this case was put into a foreign currency option contract of this case. Thus, the foreign currency option theory of put into a foreign currency option does not reflect all the economic profits that the plaintiff gained through the foreign currency exchange rate of this case when the foreign currency option contract of this case was put into a foreign currency option contract of this case.

Meanwhile, comprehensively taking account of the overall purport of arguments and arguments stated in Gap evidence No. 60 through 63, Eul purchased put options, as seen above, the defendant set the theoretical value of put options acquired by it as the contract of this case at a higher level than the theoretical value of put options acquired by the plaintiff. It is recognized that such fees include credit risk management expenses for companies, market risk management expenses (dynamic hedge cost), and business cost for designing, negotiating, selling derivatives, and using human and material resources incidental thereto, and that it is reasonable for the plaintiff to unilaterally purchase put options to avoid exchange risk, but in this case, the company should pay considerable amount of put options to the plaintiff, and thus, it is not necessary for the defendant to take advantage of the theoretical value of put options, regardless of the amount of put options to put options to the contract of this case, and thus, it is not necessary for the plaintiff to take advantage of the theoretical value of put options that the defendant would not be able to take advantage of the difference between the cost of put options and the cost of taking advantage of the price of put options.

Therefore, we would like to examine whether the fees (expenses and profits) the Defendant received from each currency option contract of this case unfairly excessive.

In this regard, the Plaintiff asserts that fee should be determined in excess of the theoretical value of put options. However, in discussing the purpose and effect of put options, the basic terms of the contract can not be ruled out in foreign currency at a certain exchange rate. The size of put options or exchange risk avoidance utility varies depending on the contract amount. The costs of put options or market risk management (dynamic hedge cost) are not different from put options theory, but rather than put options theory. The Plaintiff’s theoretical value of put options that are more than put options than those of put options (ex put options 3) or put options are more than those of put options contract. The Plaintiff’s theoretical value of put options such as premium, interest rate, premium rate, and interest rate are more than those of put options in exchange or exchange insurance, and the Plaintiff’s theoretical value of put options is more than that of put options contract. As seen earlier, the Plaintiff’s theoretical value of put options is more than that of put options contract.

On the other hand, it is possible and reasonable to individually divide specific costs, etc. constituting fees, to judge whether they are excessive.

First, it is difficult to uniformly conclude that a bank’s credit risk management cost, similar to the insurance money, has to accumulate a certain amount according to the purpose, management ability, market situation, etc. set by the bank’s policy decision in preparation for the company’s credit risk and compensates for losses incurred by a certain company due to its failure to perform its obligations, and is fair and appropriate to a certain extent. Therefore, it is difficult to uniformly conclude that only the amount of the credit risk management cost can be removed from the total fees.

In addition, as regards market risk management costs, banks unilaterally purchase foreign currency options through the currency option transaction such as put options, regardless of whether put options would be exercised, and according to delegation of Article 11 of the Foreign Exchange Transactions Act, foreign exchange transaction regulations established by the Minister of Strategy and Finance or regulations on banking business supervision are limited and the risk of foreign currency options to be held by banks should be removed. As such, banks that need to maintain foreign exchange soundness need not obtain profits from the exercise of the currency options even if the exchange rate is calculated in the future, not from the exchange rate fluctuation in the total amount of transaction (e.g., rate of exchange options). However, it is difficult for the banks to continuously purchase foreign currency options at a different rate of exchange (e., g., price fluctuation in total) and to continuously purchase foreign currency options at a different rate of exchange, not from the exchange rate fluctuation in the underlying assets at a different rate of exchange rate of exchange (e.g., price fluctuation in the underlying assets).

Finally, it cannot be said that it is meaningful to determine the difference between the cost of business and the net profit by removing the amount of the cost of credit risk management or the cost of market risk management from the total fee, unless the amount of the cost of credit risk management or the cost of market risk management is separately removed from the fee. Furthermore, since the bank sold the currency option product through free competition with another bank, it is not possible to set the cost of business or the net profit excessively in the process.

Ultimately, it would be reasonable to determine whether the Defendant’s fees acquired by the instant currency option contract are unfairly excessive, based on the ratio of the total contract amount of the instant currency option contract to the total contract amount of the call option, in particular, on the basis of the total contract amount of the call option.

However, fees received by the Defendant (the theoretical value of put options - the theoretical value of put options) through each of the instant currency options contract is USD 21,041 ($ 33,390 - USD 12,349) and USD 47,389 ($ 57,485 - USD 10,096) of January 23, 2008. Thus, when the total contract amount of put option is based on the total contract amount, the commission rate of put option contract on December 20, 2007 is 0.43%), and the commission rate of put option contract on January 23, 2008 is 0.98 9). Such a commission rate is unreasonable compared to the exchange rate, exchange goods, and other financial transactions.

Therefore, solely on the fact that there is a difference between the theoretical value of put options and the theoretical value of put options, each of the instant currency options contract cannot be deemed unfair and inappropriate for avoiding exchange risk, and thus, the Plaintiff’s above assertion is without merit.

B. Defendant’s violation of the duty of explanation, deception, and Plaintiff’s mistake on the price and commission of options

1) Summary of the Plaintiff’s assertion

In concluding each contract of this case, the Defendant did not notify the theoretical value of put options and call options and the Defendant’s obligation to provide information on the fees to be received by the Defendant, and did not violate the duty to explain, thereby deceiving the Plaintiff. Accordingly, the Plaintiff concluded each contract of this case under the status that the value of options was equal.

2) Determination

In full view of the evidence mentioned above and the evidence stated in Gap 56 through 59 and the purport of the entire argument in the testimony of non-party 2 of the first instance trial, although the theory of put options acquired by the plaintiff is low compared to the theoretical value of put options acquired by the defendant pursuant to each of the instant currency option contract, and the defendant was to receive the difference in fees (cost and profit) from the defendant, it was not clearly revealed that the above fees exist in the contract of each of the instant currency option contract or the explanation of the defendant's employees at the time of signing the contract of each of the instant currency option contract, and the defendant recommended the plaintiff to enter into a contract with the purport that it is goods that consist of equal option values of both parties and are goods that can avoid exchange risk without a premium payment.

However, as seen earlier, “in-house” does not mean that the theory of options acquired by banks and companies is the same, but it does not mean that a contracting party pays for options by exchanging options with each other, and thus a separate realistic premium is not received. In other words, it is reasonable to view that there is no need to pay a separate premium in reality in order to acquire options because the customer price of options reflecting the above fees is the same as the customer price of the options, which reflects the above fees. Meanwhile, the defendant can sufficiently anticipate the general delivery that a company pursuing profit-making as a profit-making business would recover the expenses incurred therefrom and hold a certain profit in concluding a contract for the sales of financial products to customers. Furthermore, since the plaintiff is an enterprise that has traded with banks on a large scale, it is reasonable to view that the conclusion of each contract for options in this case that the defendant did not incur any expenses to the defendant or that the defendant was aware that no profit would have been enjoyed by the defendant.

In addition, Article 65 subparag. 6 (e) of the Enforcement Decree of the Banking Business Act provides that “The Financial Investment Services and Capital Markets Act provides information on respective prices (referring to information on a level of customer transaction prices, not financial institutions’ transaction resources) for each inherent transaction.” The purport of the above provision is that “the cost of trading” means cost or profit necessary for the sale of over-the-counter derivatives, i.e., cost disclosure, but it is not necessary that at least a financial institution should disclose the theoretical difference between the cost of trading over-the-counter derivatives and the fees it receives while selling the over-the-counter derivatives. However, if the Financial Investment Services and Capital Markets Act provides that the Financial Investment Services and Capital Markets Act provides that “the financial investment business entity shall be subject to the said contract’s legal terms and conditions, such as the cost of management, market risk management, business cost, and net profit-making,” and that “the level of transaction prices” under the Enforcement Decree of the said Enforcement Decree shall be excluded from the scope of the said contract’s theoretical difference, which requires customers to provide such options.”

Furthermore, the difference between put options theory acquired by the Plaintiff and put options theory acquired by the Defendant is difficult to view that the commission (cost and profit) received by the Defendant is unduly excessive. As seen earlier, it cannot be said that the objective theory of both options in each of the instant currency options cannot be deemed as having treated a mutual imbalance as far as it is impossible to recognize rationality. Meanwhile, the Plaintiff’s decision on whether to conclude a contract in accordance with its exchange rate outlook and the contract terms (former exchange rate, exercise exchange rate, and green exchange rate) should not be deemed to have been concluded in consideration of the theoretical value of options. In addition, the Plaintiff’s decision on whether to conclude a contract in accordance with its exchange rate outlook and the contract terms (former exchange rate, exercise exchange rate, and green exchange rate) are not concluded.

Therefore, while emphasizing that the Defendant’s conclusion of each currency option contract of this case does not need to pay premium in the form of payment of additional fees, etc. in reality, it cannot be deemed that the Plaintiff violated the duty to explain or deceiving the Plaintiff by failing to specify the theoretical value of put options or put options and the information on the fees that the Defendant receives, and it is difficult to deem that the Plaintiff caused any error in the value of options. In addition, it is difficult to deem that the difference in fees or theoretical values is about the important part of the contract in light of the weight or ratio of the contract amount, etc., it is difficult to see that the difference in fees or theoretical values is about the important part of the contract.

C. Violation of the suitability principle on a currency option contract of December 20, 2007

1) Summary of the Plaintiff’s assertion

On December 207, 2007, when based on the net foreign currency inflow amount less the foreign currency disbursed from the foreign currency that the Plaintiff received as the export price, the currency option contract was also put forward on December 20, 2007. Thus, the Defendant violated the suitability principle in soliciting the currency option contract on December 20, 2007.

2) Determination

Comprehensively taking account of the overall purport of the pleadings in evidence Nos. 12 and 13, the Plaintiff’s export performance in 2007 anticipated at the time of the currency option contract in December 20, 2007 was acknowledged to have been USD 5,995,510 if it was included in USD 5,510, and USD 4,772,631 if it was excluded from the export price paid in UNFCCC. Meanwhile, even based on the Plaintiff’s assertion (referring to the document dated November 15, 2010), the foreign currency that the Plaintiff spent as import price in 207 was about USD 5,566 and USD 33,438,543 UN.

However, each currency option contract of this case is intended to avoid the exchange risk of US dollars flowing into the Plaintiff, not to avoid the exchange risk of foreign currency as a whole, including the United Nations. Therefore, even if the Defendant’s solicitation of the conclusion of a currency option contract on December 20, 2007, should be determined based on the net foreign currency inflow calculated by subtracting the import price from the export price, as alleged by the Plaintiff, as otherwise alleged by the Plaintiff, the net foreign currency inflow amount should be calculated only for the export price received or disbursed in US dollars, and it does not include the amount received or disbursed in the United Nations.

On the other hand, whether a contract was concluded on December 20, 2007 at an appropriate scale shall be determined based on whether it was reasonably predicted at the time of concluding the contract. It does not seem that the Plaintiff could have anticipated the export performance, etc. in 2008 to be different from that in 2007.

Therefore, even if the Plaintiff’s assertion was made, it should be determined whether the Plaintiff’s 4,767,065 dollars ($ 4,772,631 - USD 5,566), a net inflow of USD 4,767,065 ($ 4,772,631 - USD 5,566) was appropriate for the Plaintiff on December 20, 207. The difference is limited to USD 32,935, which was already concluded between the Plaintiff and the Defendant on January 5, 2007 and March 5, 207, the difference is merely 732,935 dollars in light of the remaining option contract amount of the contract, and it cannot be reasonably determined that the Defendant violated the principle of exchange rate of 20,000 options at the time of the contract price decline.

Ultimately, the plaintiff's above assertion is without merit to examine the remaining points of view.

3. Additional determination as to the defendant's assertion

A. Whether the Defendant actively recommended the conclusion of the currency option contract on January 23, 2008

1) Summary of the defendant's assertion

The currency option contract of January 23, 2008 is not concluded by the Defendant’s active solicitation, but rather concluded at the Plaintiff’s request, taking into account the stable decline and maintenance of the exchange rate after the conclusion of the currency option contract of December 20, 207. Thus, the Defendant did not violate the suitability principle during the process of concluding the currency option contract of January 23, 2008.

2) Determination

The suitability principle, which is discussed as one of the obligations of financial institutions to protect customers, such as banks that sell monetary options products, is applicable only to cases where investment is made by banks, etc.

However, comprehensively taking account of the following facts: Gap 3, 55 to 59, Eul 1, 2, 37, and 11's each entry in the currency option contract, and the testimony and arguments of non-party 2, the plaintiff did not have any experience in entering into the currency option contract and there was no transaction with the defendant. On May 4, 2006, the non-party 1 (the non-party in the judgment) visited the plaintiff's office and asked the non-party 2 to enter into the currency option contract with the plaintiff's employees for the purpose of avoiding exchange risk; the non-party 1 visited the plaintiff's office again on November 206, to enter into the currency option contract with the non-party 200's total amount of 10'h 20'h 10'h 20'h 10'h 20'h 20'h 20'h 20'h 107'h 207.

In addition, the following circumstances revealed by the above facts, i.e., the Plaintiff entered into the previous monetary option contract with Nonparty 1 who was an employee of the Defendant and was actively recommended to enter into the two 'Enhanced Form' contract, and even if the Plaintiff obtained profits from the two 'Enhanced Form' contract, the Plaintiff was unaware of the contents of the 'Enhanced Form' contract with other products, and thus, it appears that the 'Enhance currency option contract of December 20, 207 was concluded with Nonparty 1's active introduction and solicitation. Meanwhile, the Plaintiff concluded an exchange rate contract of January 23, 2007, which was 200 after the expiration of 1 month from the date of concluding the contract, and it was not reasonable for the Plaintiff to actively conclude the contract with the 'the first 20th 20th 207 currency option contract' on the ground that the 'the first 20th 20th 207 currency option contract was not made.

Therefore, the defendant's above assertion is without merit.

B. Whether the currency option contract on January 23, 2008 was inappropriate for the Plaintiff on the ground of OBE

1) Summary of the defendant's assertion

Inasmuch as the first maturity date of a currency option contract was already due on December 20, 207 at the time of signing the currency option contract on January 23, 2008, the contract amount of the remaining call option contract of this case is USD 9.2 million [$400,000 + (11 + 12%) and it is merely about USD 3.2 million if compared to USD 5,995,510, which was the export performance of the Plaintiff in 2007, which was the export performance of the Plaintiff in 2007. In light of the above circumstances, it cannot be deemed that the Plaintiff’s contract contract of this case was inappropriate for the Plaintiff on January 23, 2008.

2) Determination

Inasmuch as the stable decline in the exchange rate at the time of the currency option contract on January 23, 2008 is anticipated, it is not always appropriate to determine the contract amount of the call option within the scope of the expected amount of foreign currency inflow.

However, as seen earlier, the Plaintiff’s export performance in 2007 included USD 5,95,510, or USD 4,772,631 if it excludes the export price received in UNFCCC. Each of the instant currency options is aimed at avoiding the exchange risk of USD 23, 2008, and is not for avoiding the exchange risk of the entire foreign currency including the United Nations. As such, the determination of whether the Plaintiff’s export price of January 23, 2008 corresponds to the Plaintiff shall be based on USD 4,772,631, the Plaintiff’s export price of USD 207,000 ($ 4,767,065, a net amount of USD 207,000,000,000,0000,0000,000,0000,0000,0000,000,0000,000).

In addition, even if the plaintiff was aware of the fact that the "inward" contract was made by the plaintiff, the structure and contents of each currency option contract in this case, especially the situation where the maturity exchange rate rises above the green exchange rate and higher than the exercising exchange rate, the plaintiff would sell twice the put option contract at the exercising exchange rate. In light of the plaintiff's transaction experience, etc., the above circumstance alone cannot be deemed to have been deemed to have been intended to enter into a currency option contract as of January 23, 2008 from the speculative purpose to the amount of USD 4,80,000,000,000,000,0000 won.

On the other hand, although the defendant should grasp the plaintiff's export performance and recommend the appropriate contract amount, there is no evidence to ascertain the plaintiff's export performance. Thus, the defendant's invitation of the currency option contract on January 23, 2008 without clear awareness or serious consideration that the contract should not be held in the foreign currency option contract.

In full view of the Plaintiff’s transaction purpose, transaction experience, degree of risk preference, property status, and the process of concluding a contract, the currency option contract on January 23, 2008 is deemed inappropriate for the Plaintiff.

Therefore, the defendant's above assertion is without merit.

4. Parts used for repair (Scope of compensation for damage);

The Defendant, when concluding a contract on January 23, 2008, violated the obligation to protect the Plaintiff’s customers, such as the principle of suitability and the duty to explain, and thus, is liable to compensate the Plaintiff for the loss incurred by the Plaintiff. However, the scope of compensation in this case is the transaction loss incurred by the Plaintiff from the contract on January 23, 2008. This is the Plaintiff’s exercise of the Defendant’s call option pursuant to the contract on January 23, 2008, which deducts the total sum of the settlement amount (the contract amount of call option x the maturity exchange rate and the exchange rate x the difference between the maturity exchange rate and the exercise exchange rate) paid by the Plaintiff from the total sum of the settlement amount paid by the Plaintiff to the Defendant by the Plaintiff by exercising the Plaintiff’s put option.

However, in full view of the purport of the entire pleadings as seen earlier, the Plaintiff’s loss incurred by a currency option contract on January 23, 2008 is recognized as KRW 987,640,00 as indicated below. As such, the standard of damages that the Defendant is liable to compensate for to the Plaintiff is KRW 987,640,000.

The settlement rate of 0.36$ 20.40, 20.30, 20.46$ 20.30, 205$ 20.40, 30.40, 20.40, 205$ 20.40, 208.40, 205$ 20.6.40, 205, 208.40, 206.7.40, 204, 208.40, 200, 206.7.40, 30, 205.40, 206.40, 205.7.42-16, 680, 000, 200, 9.37, 304, 200, 205.37, 204

Meanwhile, the following circumstances revealed from the above facts, namely, the Plaintiff understood the structure and contents of a KIKO currency option contract from the Defendant, and understood them. Thus, even if the contract amount should be reasonably determined in consideration of the transaction purpose, export price, risk acceptance ability, exchange rate fluctuation, etc., the Plaintiff appears to have been in accordance with the contract amount recommended by the Defendant. The Plaintiff had long been aware of exchange rate fluctuation since it had long been engaged in export business (it does not seem that the Defendant believed that there was no possibility that exchange rate decline absolutely and absolutely, but the Plaintiff believed that there was no possibility that exchange rate decline). Accordingly, the Plaintiff could not be seen as the Defendant’s liability for damages from the global financial crisis, taking into account the Plaintiff’s explanation of the contents and structure of the KIKO currency option product, and thus, it was difficult to view that the Plaintiff would have suffered significant loss in the event that the exchange rate increase occurred at the time of signing a currency option contract on January 23, 2008.

In regard to this, even if the Plaintiff partly neglected to the Plaintiff when concluding the currency option contract on January 23, 2008, it was caused by the Defendant’s unfair solicitation, etc., and thus, the Plaintiff’s negligence offsetting based on the Plaintiff’s negligence cannot be allowed. However, since it is difficult to regard the unfair solicitation as intentional tort, it cannot be viewed as contrary to the principle of equity or the principle of good faith, and it is difficult to view that the Plaintiff’s negligence was unilaterally caused by the Defendant. Thus, the Plaintiff’s above assertion is without merit.

Meanwhile, the Defendant, upon the Plaintiff’s request, informed the Plaintiff on April 2008 that the Plaintiff would have been given an opportunity for early termination of the instant currency option contract and that the amount of KRW 100 million was required as the liquidation amount in this case. However, the Plaintiff waived the opportunity for early termination on the ground that the expenses of the liquidation amount would have been borne. Accordingly, the Defendant’s liability for damages should be limited to the portion arising before the first patrol officer on April 23, 2008 out of the Plaintiff’s loss arising from the currency option contract on January 23,

However, the currency option contract of January 23, 2008 was concluded by the defendant's unfair solicitation in violation of the duty of customer protection against the plaintiff, such as the suitability principle and the duty of explanation. Thus, even if there are circumstances like the defendant's aforementioned assertion, it cannot be said that the plaintiff has a duty of early termination of the contract and preventing the expansion of damage therefrom, and the defendant's liability for damages is not limited to the part of the plaintiff's loss incurred before the first patrol officer on April 2008. Thus, the defendant's above assertion is without merit.

Therefore, the defendant shall pay to the plaintiff 345,674,00 won (987,640,000 won x 35%) and 284,403,000 won [(987,640,000 won - 175,060,000 won] x 35%] from January 14, 2009 to the part for which the settlement date has arrived before January 14, 2009, 61,271,00 won (175,060,000 won x 35%) from the day after the settlement date to the day after the settlement date, 200% of the annual interest rate prescribed by the Civil Act as to the existence or scope of the defendant's obligation to pay damages for delay from January 23, 2009 to the day after the settlement date.

5. Conclusion

Therefore, the plaintiff's primary claim is dismissed as it is without merit, and the conjunctive claim shall be accepted within the scope of the above recognition with merit, and the remainder of the conjunctive claim shall be dismissed as it is without merit. Since the judgment of the court of first instance is unfair with a different conclusion, it is so decided as per Disposition by the assent of all participating Justices.

Judges Lee Jae-won (Presiding Judge)

Note 1) In the first instance judgment, the first instance judgment indicated “Knock-in-investment” as “Knock-in-investment”, but the “Knock-in-be” as “Knock-in-be”. However, the Barunmark in accordance with the loaning method is “green” and “green-in-be”.

2) The customer price of the KIKO option contract, such as the instant currency option contract, is determined by adding or reducing the costs and profits of the bank to the theoretical value of the option. As such, where a bank sells put options to customers, i.e., to the customer, i., e., the customer price theory + + + gains; and where a bank purchases put options from customers, i.e., “large customer price = - cost and profit.” Generally, i.e., puts the customer price of put options by adding some of the fees to put options theory, i.e., costs and profits., setting the customer price of put options, and setting the customer price of put options at the same level by setting the customer price of put options by deducting the remaining fees from the theoretical value of put options theory. However, it is also possible to set the customer price of put options without deducting the entire fees from put options theory. There is no provision regarding whether to set the customer price at the price of put options by way of the individual options theory.

(3) The cost of credit risk management shall be calculated by multiplying the amount of credit risk exposure by the default rate and the loss rate in default.

(4) Article 2-9 (Limit of Foreign Exchange Transfer) (1) of the Foreign Exchange Transaction Regulations shall be as follows: 1. Purchase and sale of foreign currency shall be an amount equivalent to 50/100 of its equity capital as of the end of the preceding month on the basis of the aggregate of purchases in excess of foreign currencies by each foreign country: Provided, That in the case of the Export-Import Bank of Korea, an amount equivalent to 150/100 of its balance of foreign currency loans, and in the case of the Export-Import Bank of Korea, an amount equivalent to 110/100 of its equity capital as of January 14, 2004 (in the case of establishment after January 14, 2004, an amount equivalent to 110/100 of its equity capital as of the end of the preceding month on the basis of the aggregate of purchases in excess of foreign currency by each foreign country:

5) Article 63 (Foreign Exchange Risk Control) (1) of the Regulations on the Supervision of Banking Business shall be confirmed on the basis of the balance of each business day as to whether a foreign exchange handling agency establishes or amends the management standards referred to in paragraph (1) or handles foreign exchange transactions in excess of such standards (hereinafter referred to as “foreign exchange circulation limit”). <2) If a foreign exchange handling agency violates the foreign exchange circulation limit, it shall report it to the Director within three business days from the date of the violation.

6) A bank means the hedge method in which the bank concludes a counter-transaction with an enterprise which is a customer, in the form or condition of the transaction.

Note 7) (21,041 US$ 400,000 x 12) x 100 x the third place below the decimal point.

Note 8) ($ 47,389 / USD 400,000 x 12) x 100 x the third place below the decimal point.

9) Based on the total contract amount of put options, twice the amount of put options would be double.

Note 10) The rate of interest rate swap products is approximately KRW 0.15% on the basis of the total contract amount, and approximately KRW 0.60% on the basis of the total contract amount. The rate of commission due to the sale of fund products is approximately KRW 1.82% on the basis of the total contract amount, and the exchange rate is above KRW 1% on the basis of the total exchange amount.

11) Article 65 subparagraph 6 (c) of the Enforcement Rule of the Banking Business Supervision Regulations: In order for the other party to the transaction to evaluate the structure and risk of the transaction, the information on the transaction shall be notified in a manner appropriate for the other party to the transaction, such as important factors that affect the risk and potential loss inherent in the transaction. In the case of the non-fixed derivatives transaction, the relevant risk shall be separated and notified for each individual transaction inherent in the transaction, and in the case of the non-fixed derivatives transaction, the change in profit and loss of the transaction in light of the terms of the contract, liquidity, etc., the details related to the change in appraised profit and loss shall be explained in addition to the simple change in cash flow due to the change in the financial variables

(2) Since the enactment of the Financial Investment Services and Capital Markets Act after the conclusion of each currency option contract of this case, the suitability principle has been stipulated in Article 46 as one of the regulatory systems for recommending investment to ordinary investors. The legal suitability principle also applies only to “investment solicitation”. Meanwhile, the adequacy principle applicable to cases where financial investment instruments prescribed by Presidential Decree, such as derivatives, are sold to ordinary investors without investment solicitation, was newly established as of February 3, 2009 by Act No. 9407, and Article 46-2 was newly established. Article 46-2 of the Financial Investment Services and Capital Markets Act (Article 46 of the Financial Investment Services and Capital Markets Act, etc.) ① A financial investment business entity shall verify whether an investor is an ordinary investor or a professional investor. ② A financial investment business entity shall grasp information about the investment purpose, status of property, experience in investment, etc. of ordinary investors through interviews, inquiries, etc. before recommending investment, and shall not obtain an ordinary investor’s signature (including an ordinary investor’s digital signature under Article 2 subparagraph 2 of the Digital Signature Act; hereinafter the same shall not apply).