The Korea Exchange has informed asset management firms that the review process for new listings of general ETFs may be delayed starting this month due to increased market turmoil surrounding single-stock leveraged ETFs.
According to Yonhap News Agency, the Korea Exchange conducted a survey of major asset management firms at the end of last month regarding the demand for upcoming ETF listings. They advised that even if preliminary reviews are requested this month, the schedule may be delayed compared to usual timelines, urging firms to plan accordingly.
While new applications can still be submitted, the exchange will prioritize existing review workloads, meaning some listing schedules may be pushed back starting this month.
If the exchange's review process is delayed, it could subsequently affect the Financial Supervisory Service's review of securities registration statements and the overall listing schedule, potentially hindering ETF launches.
This delay in reviews follows increased market volatility since the listing of single-stock leveraged ETFs at the end of May, which has led to heightened demands for data submissions and responses from the National Assembly and financial authorities.
The single-stock leveraged ETFs for Samsung Electronics and SK Hynix have faced criticism for exacerbating losses for individual investors and increasing market volatility during recent declines in semiconductor stocks.
It is reported that the ETF listing operations are managed by a limited number of personnel within the exchange. The review team consists of four members, some of whom have been reassigned to handle responses to the National Assembly and financial authorities regarding single-stock leveraged ETFs. This situation has been compounded by the summer vacation season and a backlog of existing reviews.
Typically, the review process for an ETF from the exchange to actual listing takes about three to four months. After passing the exchange review, a securities registration statement is submitted to the Financial Supervisory Service, and once the statement takes effect, the listing date is confirmed, followed by the initial setup procedures.
As a result, products that applied for preliminary reviews in the second quarter are likely to be launched as scheduled this month and next. In contrast, products applying for review this month that were expected to list in the fourth quarter may face delays. Industry observers warn that if the review delays persist, the number of new ETF launches by year-end could significantly decrease.
However, the exchange clarified that it has not restricted new ETF review applications or suspended the listing review process. Concerns have been raised in the industry that asset management firms that have not launched single-stock leveraged ETFs are also being affected by the listing delays as a response to the market turmoil driven by the introduction of these products under the guidance of financial authorities. Notably, smaller asset management firms, for whom launching new ETFs is directly tied to business growth, face greater burdens compared to larger firms that already have established product lines and market shares.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.