Lee Myung-ho, CEO of Korea Securities Depository, "Will Lead Transparency in Private Equity Funds and Improve Short Selling"

Introduction of Standard Code Management System for Non-Marketable Assets 'Enhancing Transparency of Private Equity Funds'
Establishment of Lending Transaction Contract Confirmation System to Prevent Naked Short Selling 'Resolving Distrust'

Lee Myung-ho, President of the Korea Securities Depository, is explaining this year's management goals at the '2021 New Year Press Conference' held online on the morning of the 8th.

[Asia Economy Reporter Lee Seon-ae] The Korea Securities Depository's (KSD) goal for this year is to enhance transparency in the private equity fund market and support policy improvements in the short-selling system. This goal is interpreted as a response to criticism last year for negligence in fund supervision following the "Optimus Fund redemption suspension incident." Additionally, it is seen as an expression of the intention to secure market transparency and coordinate efforts by establishing order in short selling, which has attracted the most market attention.

On the morning of the 8th, Lee Myung-ho, president of KSD, explained at the '2021 New Year Press Conference' held online that this year's management goal is set as "Digital Financial Innovation with the Market." The main business plans of KSD include ▲ enhancing transparency in the private equity fund market ▲ building a venture investment support platform ▲ establishing a securities lending contract confirmation system.

KSD plans to promote system development to support institutional improvements aimed at enhancing transparency in the private equity fund market this year. It will introduce a standard code management system for non-marketable assets to assign and manage standard codes for non-marketable assets that are not electronically registered or deposited. Through the fund asset balance reconciliation support system, it will assist in comparing and verifying asset details between collective investment managers and trustees. It is expected that the system will enable comparison of asset specifications, verification of asset existence, and confirmation of fund operation methods. The system is scheduled to open in June this year, followed by steps to activate its use.

Previously, the Financial Supervisory Service (FSS) issued a severe institutional warning to KSD, the administrative manager of the Optimus Fund, and imposed salary reductions on related employees. Until now, KSD has claimed that administrative managers of investment trusts have no obligation to reconcile and verify fund-included assets. However, the FSS judged that KSD neglected fund management supervision and notified disciplinary action. President Lee said, "Last year's Optimus Fund redemption suspension incident was an opportunity to comprehensively review the standard price calculation tasks our company performs," adding, "We are currently refraining from accepting new mandates, but once the consulting results come out in the first half of this year, we will reconsider based on them."

KSD is also promoting the establishment of a securities lending contract confirmation system and a service for storing original securities lending contracts of borrowers to support the government's policy to improve the short-selling system and prevent naked short selling. The securities lending contract confirmation system allows lenders and borrowers to confirm securities lending contracts on the KSD system and store securities lending information, including the contract confirmation date and time. By managing this information within the system, it aims to fundamentally block the possibility of transaction record manipulation, enhance transparency in securities lending transactions, and alleviate distrust of individual investors toward the short-selling system.

In addition, KSD plans to continuously pursue its unique tasks this year, including ▲ strengthening support for voting rights services ▲ advancing global investment support infrastructure ▲ expanding support projects for growth of innovative and startup companies in the capital market ▲ enhancing electronic registration services ▲ leading the realization of social value.

President Lee stated, "The management environment surrounding KSD has shifted to a competitive environment since the implementation of the electronic securities system. Considering the speed of changes such as the spread of non-face-to-face finance and digital transformation of financial tasks, we cannot guarantee our survival by resting on past achievements," adding, "We have set the 2021 management goal as 'Digital Financial Innovation with the Market' and will do our best by pooling the wisdom and capabilities of all executives and employees to contribute to the development of the capital market."

Meanwhile, last year, KSD stabilized and revitalized the electronic securities system, which brought significant changes to the capital market, and opened a new electronic voting system called 'K-VOTE,' greatly improving user convenience. It also significantly enhanced investors' access to information on securitized assets through the establishment of an integrated information system for securitized securities and worked to protect investors and provide rights by building a foreign currency securities information management system.

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