KSD Opens Non-Marketable Asset Investment Support Platform in June... Enhancing Market Transparency

[Asia Economy Reporter Lee Seon-ae] The Korea Securities Depository (KSD) is launching a platform service to support investment in non-marketable assets to enhance transparency in the private equity fund market. KSD announced on the 21st that the non-marketable asset investment support platform service will begin on the 28th of next month, with about 200 companies participating, representing approximately 80% of the industry.

Non-marketable assets refer to investment assets that cannot be centrally stored or managed by KSD, such as private bonds, unlisted and non-deposited securities, real estate, over-the-counter derivatives, and overseas assets.

To this end, KSD has established a standard code management system for investment target assets related to non-standard assets and a fund asset balance reconciliation support system. The non-marketable asset standard code management system creates standard codes commonly used among industry participants and enables sharing of asset information. For this purpose, classification systems for 90 types of securities, 56 types of derivatives, 30 types of financial products, 56 types of special assets, and 12 types of real estate have been prepared.

Asset management companies input essential information related to non-marketable assets into the system, and KSD checks for code duplication and identity to assign asset codes and asset names. Subsequently, trustees verify and approve the information entered by the management companies, enabling asset information sharing.

The fund asset balance reconciliation support system is designed to assist in mutual reconciliation and verification between the asset management companies' item details and the trustees' custody details.

When asset management companies and trustees transmit balance details of assets held by each fund, balance reconciliation is performed for the notified funds. Afterwards, the system manages the completion status of the balance reconciliation and explanations for any mismatched assets. The balance reconciliation support system plans to consider expanding its service scope to include public offerings, discretionary investment, and management participation-type private equity funds upon requests from policy authorities in the future.

KSD stated, "Through the use of jointly shared standard codes and balance reconciliation support, we expect to prevent a second Optimus fund incident, strengthen transparency and accountability in the private equity fund market, and thereby enable market stability and trust recovery." Additionally, by establishing a reporting system for supervisory authorities, supervisory functions can be enhanced, and the industry can expect reduced workload and strengthened risk management through the computerization of balance reconciliation tasks."

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