Ants to Receive More IPO Shares Starting as Early as Next Month

[Asia Economy Reporter Minji Lee] A system improvement plan to allocate more public offering shares to individual investors is expected to be implemented as early as next month.

According to the Financial Services Commission and the financial investment industry on the 15th, the amendment to the industry self-regulation rule governing the initial public offering process, titled ‘Regulations on Securities Underwriting Business, etc.,’ is expected to be announced as early as next week and applied immediately from next month.

On the first day of Big Hit Entertainment's KOSPI listing on the 15th, a listing ceremony was held in the lobby on the first floor of the Korea Exchange in Yeouido, Seoul. (From left) Taejin Park, CEO of JP Morgan Seoul Branch; Jiwon Park, HQ CEO of Big Hit Entertainment; Seokjun Yoon, Global CEO of Big Hit Entertainment; Siyuk Bang, Chairman of Big Hit Entertainment; Jiwon Jung, Chairman of Korea Exchange; Jaejun Lim, Head of the Korea Exchange Stock Market Division; Youngchae Jung, CEO of NH Investment & Securities; Seongchae Ra, Deputy Head of the Korea Exchange Stock Market Division / 2020.10.15. Photo by Joint Press Corps

According to the financial investment industry, the main content of this system reform is to allow individuals to be given priority allocation for forfeited shares in employee stock ownership. Currently, 20% of the public offering volume is preferentially allocated to employee stock ownership, but in cases of forfeiture arising from large public offering sizes, priority is given to institutions. By reallocating forfeited shares to individuals, it is expected that the amount allocated to individual investors will increase.

It is also expected that a ‘lottery system’ will be introduced, which prohibits multiple applications at several securities firms and expands the allocation of public offering shares to small investors. Under the current system, even among individual investors, those with higher deposits receive more public offering shares. Similar to Hong Kong, a leading IPO country, it is anticipated that shares will be allocated to winners up to a predetermined cap if a certain amount or more is deposited as a guarantee.

A Financial Services Commission official said, “Although the exact timing has not been finalized, we have been discussing measures related to the allocation volume for individual investors for a long time,” and added, “We will announce the related amendment soon and proceed with its application.”

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