Ahead of the implementation of the public offering fund direct listing system in October, it has been confirmed that only two small and medium-sized asset management companies completed their preliminary listing review applications. Given the large scale of the set amount of 500 billion won, the exclusion of overseas equity funds, and the relationships with sales channels such as banks, it is assessed that there was not much incentive to participate. Additionally, the fact that the term of Yoo-seok Seo, chairman of the Korea Financial Investment Association, who actively promoted the direct listing of public offering funds, is only about 5 months left seems to have had an impact.
According to the financial investment industry on the 22nd, the asset management companies that submitted their public offering fund direct listing preliminary review applications, which had a submission deadline of the 21st, are Daishin Asset Management and Eugene Asset Management. Both firms sent the relevant documents via official letter, and if the review passes, they plan to list one type of fund each to coincide with the implementation date of the system on October 27.
The exchange postponed the implementation of the direct listing system, which was scheduled for the first half of this year, to the end of this month due to the securities companies' system development and then postponed it to the end of October. It was known that only about two asset management companies would participate in the listing until the beginning of this year, and the preliminary review application result showed no changes.
When the system was first proposed, expectations were high that the public offering fund market would become active after the listing. However, the scale of the set amount hindered the asset management companies. In the fund class classification system, the X (listed) class was added with a listing standard of 70 million won for the X class and a total set amount of over 500 million won, but it turns out that less than 20% of the 4,000 funds designated as innovative financial services meet the criteria of over 500 million won.
Additionally, the exclusion of public offering funds with underlying assets in 'overseas stocks' from the direct listing target led to a decrease in product diversity, which resulted in passive participation from asset management companies. Most funds are sold by banks, and there is no reason to launch a product that would worsen the relationship with key sales channels in a situation where the product competitiveness is low.
The fact that Yoo-seok Seo's term as the chairman of the Korea Financial Investment Association ends this year adds to the uncertainty. Having taken office in 2023, Seo aimed to invigorate the stagnant public offering fund market, focusing on promoting the direct listing of public funds. The essence was to allow public funds to be traded in real time on the exchange like ETFs.
However, as the end of his term approaches, there are evaluations that the introduction of the system has limitations in gaining momentum. There has been no instance of re-election for the chairman of the financial investment association, and one of Seo's major pledges, the 'Ddim Fund' specialized for preparing old age assets, was introduced in September last year but did not gain significant popularity. According to KG Zeroin, the total net inflow of 25 domestic Ddim Funds has been calculated at 137.3 billion won as of the 21st of this month.
Currently, potential candidates for the next chairman of the financial investment association include former NH Investment & Securities CEO Young-chae Jeong, former KB Securities CEO Jung-rim Park, Shinyoung Securities CEO Seong-yeop Hwang, and former KB Asset Management CEO Hyun-seung Lee. Chairman Seo has not yet disclosed a specific position regarding his re-election challenge. At a press conference held on the 16th, he noted concerning re-election, 'Now is the time to focus on issues related to the growth of the capital market,' and added, 'It would not be too late to talk about running in September or October.'
One official from an asset management company said, 'In a situation where the re-election of Chairman Seo, who promoted the system, is uncertain, it is likely that asset management companies found it difficult to actively participate in the public offering fund direct listing after weighing various merits,' adding, 'A large asset management company was hesitant to apply until the last moment but eventually withdrew its application due to reasons such as a reduction in sales channels.'
Meanwhile, it appears that the timing for the implementation of the public offering fund direct listing will not be delayed any further. An exchange official stated, 'Since we have a comfortable schedule set until the end of October, the likelihood of changes in the timing of implementation is small,' noting that 'the two asset management companies that applied will proceed as is without significant changes.'