The launch of Korea's new securities market, initially targeted for November, may be delayed. Concerns have arisen as a consortium preparing for the official licensing of non-monetary trust income securities brokerage competes with the exchange's new securities market, which offers similar products. Additionally, there is a limited supply of products available for the market, raising fears that initial liquidity could become concentrated if the exchange opens first.
According to the financial investment industry on August 27, the exchange is finalizing preparations for the new securities market, aiming for a launch on November 16. A mock market is scheduled to operate from October 6 to November 13.
However, both the KDX consortium and the NXT consortium (NextChange) are also undergoing the official licensing process for non-monetary trust income securities brokerage. With the over-the-counter distribution platform's license expected to be granted by the end of the year, questions have been raised about the appropriateness of launching the new securities market in November.
Currently, the fractional investment market is facing delays in institutionalization, resulting in an insufficient supply of products. Some early-stage providers that previously offered issuance services have ceased operations, limiting the availability of new products in the market. If the exchange's market opens first, there is a risk that investors and trading volumes could become concentrated on a few products.
This situation poses a challenge for the consortium preparing the over-the-counter distribution platform. Even if the platform receives its official license and launches, it may struggle to establish itself in the market if the exchange secures investors first with overlapping initial products.
The first listed product in the exchange's market is expected to be a fractional investment product from the Korea Maritime Promotion Corporation, but industry assessments suggest that its scale is not substantial. The product is anticipated to be around 40 billion won.
The original intent of the exchange market was to facilitate concentrated trading of large-scale liquidity and strictly regulated products while allowing highly individualized and diverse fractional investment products to be distributed complementarily through the over-the-counter market (various over-the-counter brokerage firms). Accordingly, the listing requirements were set stringently, requiring issuers to have a minimum capital of 2 billion won and to retain at least 1 billion won or 5% of the issuance amount until maturity.
The exchange faces a complex calculation regarding the timing of the market launch. It has been preparing for the launch since receiving designation for a financial regulatory sandbox related to the new securities market on December 13, 2023. The basic designation period for the financial regulatory sandbox is two years, with a possible one-time extension of up to two years. With nearly three years having passed since the designation, the exchange is under pressure to avoid further delays in launching the market.
The Financial Supervisory Service has expressed its commitment to expedite the official licensing process for the over-the-counter distribution platform. A representative stated, "We recognize that the fractional investment market may be at risk and understand the industry's concerns. We will work to ensure that the distribution platform launches as quickly as possible to create a foundation for market activation."
* This article has been translated by AI.
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