KSD to Support Private Fund System Improvements via 'FundNet' in the First Half of Next Year

"Priority Development Planned for Fund Asset Balance Reconciliation Support System"

[Asia Economy Reporter Oh Ju-yeon] The Korea Securities Depository (KSD), which faced responsibility disputes over the Optimus fund incident, will introduce a system to transparently manage the registration of private fund investment asset details by the first half of next year.

On the 3rd, KSD announced that it is actively considering promoting the private fund system improvement support project through FundNet, a core infrastructure of the asset management industry.

FundNet is an ICT-based network service platform established by KSD in 2004 to enable real-time processing of fund setup/redemption, settlement, operation instructions, and supervisory support, which were previously handled manually via phone, fax, and email among financial companies such as asset management companies, custodians, sales companies, and general administrative companies. Currently, more than 500 financial institutions use FundNet, processing up to 800 million transactions annually.

KSD plans to first build a fund asset balance reconciliation support system that allows market participants to mutually verify fund asset information to support private fund system improvements. Through this system, asset management companies (administrative companies) and custodians will compare and verify the fund investment asset details (including asset name, asset code, balance, etc.) they transmit, supporting stable balance reconciliation operations.

KSD’s move to manage private funds through FundNet is due to the recent Optimus incident.

KSD, which was responsible for calculating the fund’s net asset value for Optimus Asset Management, faced criticism for not verifying Optimus’s asset information. Optimus claimed to invest in 'public institution accounts receivable' but actually invested in loan shark private loans, causing losses to investors. While KSD explained that as a simple administrative manager, it had no obligation to verify private fund investment assets individually, it enabled sales companies, custodians, and administrative companies to mutually verify private fund assets through FundNet to prevent a second Optimus incident.

For the successful implementation of the fund balance reconciliation support system, it is necessary to standardize the non-marketable asset codes that each market participant independently creates and manages for the same investment assets. As a foundational project for the fund balance reconciliation support system, KSD plans to proactively establish a fund non-marketable asset standard code management system.

The fund non-marketable asset standard code management system and the fund asset balance reconciliation support system are targeted to open by the first half of next year. Since standardizing operations and system development require enormous effort and considerable costs, voluntary cooperation from the asset management industry is essential. Therefore, KSD explained that it will consult with the industry on forming and operating a task force to ensure smooth project promotion.

After the successful establishment of the system, KSD plans to provide operation instruction support services for non-marketable assets mainly invested in by private funds, as well as continuous monitoring support services for related transaction details. KSD expects that building a standardized and automated operation instruction support system for non-marketable asset transactions will enhance transparency of transaction information among market participants.

A KSD official stated, "By expanding FundNet, currently limited to public funds, to private funds, we can strengthen investor protection through mutual checks and monitoring among market participants via the system. Additionally, by processing tasks that were manually handled via phone, fax, and email through the system, we expect to significantly improve operational stability and efficiency."

This content was produced with the assistance of AI translation services.