KSD Launches 'Non-Marketable Asset Investment Support Platform' to Enhance Transparency of Private Equity Funds

[Asia Economy Reporter Lee Seon-ae] The Korea Securities Depository (KSD) announced on the 28th that it will launch the 'Non-Marketable Asset Investment Support Platform' service to enhance transparency in the private equity fund market and support the fostering of venture capital. Non-marketable assets refer to investment assets such as private bonds and other unlisted and non-deposited securities, real estate, over-the-counter derivatives, and overseas assets that cannot be centrally stored or managed by the KSD.

At 10 a.m. on the same day, KSD held a commemorative ceremony for the 'Non-Marketable Asset Investment Support Platform' at the Glad Hotel in Yeouido, Seoul. About 50 key figures from the asset management industry, the Financial Supervisory Service (FSS), and the Korea Financial Investment Association (KOFIA), who worked to provide institutional support, attended. Among them were Director Lee Joo-hyun of the FSS, Executive Director Na Seok-jin of KOFIA, Head Jo Jong-kwang of Korea Securities Finance, Director Jeong Sang-wook of KTB Asset Management, and Executive Director Seo Seung-joo of Shinhan iTAS. At the opening ceremony, awards were presented to participants who actively cooperated in the platform construction project.

KSD emphasized that although the private equity fund market has experienced quantitative growth, the expansion of investments in highly profitable non-marketable assets has recently exposed side effects such as large-scale redemption and redemption suspension incidents, which undermine investor protection. As one of these side effects, KSD cited the Optimus incident, pointing out that it occurred due to the diversity and non-standardization of asset types combined with the prevailing manual processing practices. In response, KSD established standards reflecting industry practices and then built them into a computerized platform. The standards refer to the analysis of business practices to create an asset classification system (identifying 244 asset types), an information management system by asset type, a standard code assignment system, and a role system for participating institutions.

The platform establishes a standard code management system for non-marketable assets that are not electronically registered or deposited with KSD, enabling reconciliation and verification between collective investment managers' operation details and trust companies' asset custody details. It is expected to prevent fraud similar to the Optimus incident. The reconciliation between asset management companies and custodians will become more transparent, helping to restore investor trust. The FSS and KOFIA have specified platform usage-related content in the asset reconciliation guidelines and trust companies' custody operation guidelines to promote platform participation.

Legislation is anticipated to expand custodians' asset reconciliation obligations from private equity funds to all public and private funds, and KSD plans to expand the platform accordingly. Additionally, a non-marketable asset operation instruction support system is under development, targeting the first half of 2022.

President Lee Myung-ho said, "KSD will continue to strive to build a sound and dynamic private equity fund market," adding, "We plan to expand support for balance reconciliation and develop operation instruction services for the industry."

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