As the first approvals were announced recently in the licensing reviews for integrated investment accounts (IMA) and commercial paper issuance—long-standing goals for securities firms—tension is rising among firms that have yet to receive approval.
Given the large number of applicants, this review will not be announced all at once; results will be released sequentially depending on the application timing and the due diligence status. Accordingly, securities firms not included in the first pass list are thoroughly preparing to clear the additional reviews.
According to the investment industry on the 14th, the Securities and Futures Commission under the Financial Services Commission (FSC) deliberated and resolved on designating Mirae Asset Securities and Korea Investment & Securities as IMA operators at its regular meeting on the 12th. If they pass the FSC's regular meeting within this month, they will be able to push ahead in earnest with the IMA business.
Among the three IMA applicants, another candidate, NH Investment & Securities, is relatively behind in the review schedule because it submitted its application at the end of September.
In the commercial paper segment, Kiwoom Securities was also selected as an eligible designee on the same day. Kiwoom's quick filing and response to due diligence appear to have been effective, while the reviews for the remaining applicants—Samsung Securities, Shinhan Investment & Securities, Meritz Securities, and Hana Securities—are still underway.
The IMA is a financial product in which a large securities firm, under a principal guarantee, concentrates customer deposits in corporate finance assets to generate profit. Thanks to the advantages of high profitability and principal protection, it is drawing strong expectations as a means of raising funds through retail channels.
However, the licensing requirements are stringent. Only large securities firms with at least 8 trillion won in equity capital can apply, and since the system was introduced in 2017, this is the first actual case of approval.
Commercial paper issuance is a bond that can be issued up to 200% of equity capital and is drawing attention as a means of efficient funding that leverages a securities firm's brand trust and creditworthiness. Currently, only four securities firms—Mirae Asset Securities, Korea Investment & Securities, NH Investment & Securities, and KB Securities—hold issuance authority, and the new licensing requirement is equity capital of at least 4 trillion won.
NH Investment & Securities previously fell short of the equity requirement, but it moved to apply for IMA after receiving a 650 billion won paid-in capital injection from its parent, NongHyup Financial Group. Although its credibility was hit recently by a controversy over an executive's use of nonpublic information, Chief Executive Yoon Byung-woon is seeking to shift the mood by announcing stronger internal controls.
Securities firms applying for commercial paper issuance are also busy, forming internal task forces and setting companywide response strategies.
Meanwhile, for both IMA and commercial paper, financial authorities are requiring the bolstering of venture capital supply as a mandatory condition. This means firms should build the capacity to actively provide liquidity to innovative industries, such as technology corporations and promising startups, moving away from simple real estate investments. From the securities firms' perspective, it is seen as a challenging task.