A foothold has been laid for domestic securities firms to leap into global investment banks (IB) like JPMorgan or Goldman Sachs. This comes as the first license has been granted for the integrated managed account (IMA) business, which allows direct investment of client deposits into a variety of assets, including corporate finance and alternative investments.
On the 19th, the Financial Services Commission (FSC) held a regular meeting and designated Korea Investment & Securities and Mirae Asset Securities as comprehensive financial investment firms with equity capital of 8 trillion won or more. Accordingly, the first operators have been selected eight years after the IMA system was introduced. Kiwoom Securities was designated as a comprehensive financial investment firm with equity capital of 4 trillion won or more and received a short-term finance license to conduct the commercial paper business.
Authorities said of the three securities firms that obtained IMA and commercial paper licenses this time, "They have prepared the personnel, physical facilities, internal controls, and conflict-of-interest prevention systems needed for the business," and noted, "Korea Investment & Securities and Mirae Asset Securities are developing IMA products with the goal of launching within the year, and Kiwoom Securities will launch commercial paper within the year, so they will be able to share revenue from asset management with financial consumers."
In addition, the FSC revised the system to encourage these large securities firms to channel the funds they raise more actively into venture capital. It introduced a "venture capital supply obligation" for comprehensive financial investment firms, requiring them to invest at least 25% of funds raised through commercial paper or IMA into venture capital.
Venture capital includes securities or loan claims issued by small, midsize, and venture corporations; debt securities rated A or below excluding those of large corporate affiliates; and equity stakes and loan claims in funds such as the Mother Fund, KOSDAQ Venture Fund, high-yield fund, and materials, parts and equipment fund. Investment in the advanced strategic industries fund of the National Growth Fund is also recognized as venture capital.
Neither commercial paper nor IMA is covered by the Depositor Protection Act like bank deposits. In theory, these are products where principal could be lost if a securities firm becomes distressed, but the firms guarantee principal on their own. From an investor's perspective, they can expect an annual yield of around 5% to 8%, higher than bank deposits, while having principal guaranteed.
IMA is similar to commercial paper, but it is a product that distributes performance together with principal, rather than a yield fixed in advance by the securities firm. The yield varies with management results. Also, while commercial paper is a short-term product with a one-year maturity, IMA has no maturity limit.
From the operator's perspective, they can maximize management capabilities and boost profitability. While the management limit for commercial paper is 200% of equity capital, IMA can raise funds up to 300% of equity capital.
The financial authorities plan to continue reviewing NH Investment & Securities, which applied for an IMA license, and the remaining securities firms—Samsung, Meritz, Hana, and Shinhan—that filed new applications for commercial paper, to decide whether to grant licenses.