SK Hynix's plan to list its U.S. subsidiary Solidigm on Nasdaq has raised concerns from Lee Chan-jin, head of the Financial Supervisory Service (FSS), who stated that the company may be in violation of dual listing regulations. The decision on Solidigm's Nasdaq listing is expected to hinge on the Financial Services Commission's (FSC) interpretation. Lee acknowledged that the FSS expedited the review process for the single stock leveraged exchange-traded fund (ETF) to align with the FSC's announced schedule.
During the FSS's audit session at the National Assembly's Political Affairs Committee on October 19, lawmakers questioned the implications of Solidigm's overseas listing for domestic shareholder protection and the review process for the single stock leveraged ETF.
In response to a query from Representative Park Seong-hoon of the ruling People Power Party regarding Solidigm, Lee said, "We are continuously monitoring the Solidigm issue, and both the FSC and we are currently assessing the potential violation of dual listing regulations."
However, he added, "We are waiting for the FSC's interpretation regarding whether it falls under the domestic securities registration requirements, and we will make every effort to take appropriate measures based on a thorough review, including the points you raised."
Solidigm is a semiconductor company established by SK Hynix following its acquisition of Intel's NAND flash and solid-state drive (SSD) business. The recent consideration of a Nasdaq listing has sparked concerns among domestic shareholders about potential dilution of their equity and the controversy surrounding dual listings.
Representative Park pointed out that Solidigm's listing could undermine the economic interests of existing SK Hynix shareholders. He specifically raised suspicions that while SK Hynix informed the U.S. Securities and Exchange Commission (SEC) about the negative impact on the parent company's stock due to the subsidiary's listing, it has not provided sufficient information to domestic investors.
The speed of the review process and risk assessment for the single stock leveraged ETF also emerged as contentious issues. Representative Park Dae-chul noted that the average listing period for general ETFs is 62 days, while the comparable product group took 43 days, yet the single stock leveraged ETF was processed in just 29 days. He questioned the circumstances under which the FSS conducted its review of the securities registration before the Korea Exchange's preliminary listing review was completed.
The FSS clarified that the preliminary listing review by the exchange and the securities registration review are separate processes. However, Lee acknowledged that the FSC had announced the product listing schedule as a policy decision, stating, "We expedited the review to meet that schedule." The FSC had announced on April 21 that the revised enforcement decree was approved, projecting that the single stock leveraged ETF could be listed as early as May 22. Subsequently, on May 15, the anticipated listing date was set for the 27th.
Concerns were also raised about whether the structural risks of the product had been adequately assessed in advance. Representative Choi Eun-seok of the People Power Party demanded the disclosure of the discussions between the FSC and the FSS regarding the structural risks of the single stock leveraged ETF, which were highlighted in a research report commissioned by the FSS. When asked if he had read the 150-page report, Lee admitted, "I actually have not seen it."
* This article has been translated by AI.
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