Full Effort to Revitalize KONEX... 100 Billion Fund Established, Basic Deposit Account Abolished, and Promotion of Fast Transfer Listing

[Asia Economy Reporter Lee Seon-ae] Financial authorities will abolish the basic deposit requirement and the small investment-only account system to revitalize KONEX, a market dedicated to small and medium-sized enterprises (SMEs). They will also reform the KOSDAQ fast-track listing system by easing financial requirements to encourage new listings of companies and establish a related fund worth 100 billion KRW.

The Financial Services Commission and Korea Exchange announced on the 9th that they have prepared such a "KONEX Market Revitalization Plan." KONEX is a market exclusively for SMEs and venture companies, established in July 2013 to support capital raising and intermediate recovery of venture capital. Recently, with preferences shifting to direct listings on KOSDAQ and alternative investment asset trading, the number of listed companies has decreased, showing signs of contraction.

First, the basic deposit system requiring 30 million KRW or more and the small investment-only account regulation with an annual limit of 30 million KRW, which apply to investors in the KONEX market, will be abolished. This is to balance the investor protection system, including regular and ad hoc disclosures and daily price fluctuation limits (15%), with those of the securities market (KOSPI), KOSDAQ, and K-OTC. Other markets impose a deposit of 10 million KRW only on domestic derivatives, and there are no deposit or limit regulations on unlisted stocks.

However, investors starting to trade for the first time will be given prior notice of investment precautions to ensure they fully understand the investment risks in the KONEX market. This consideration is due to the minimal regulations on new listing reviews and disclosures in the KONEX market.

To facilitate companies moving easily from KONEX to the KOSDAQ market, the financial requirements of the "fast-track listing system" will be eased. Financial requirements will be excluded, and a new route will be added allowing transfer listings if trading is active in the KONEX market. The burden of accounting, disclosure, and designated advisor fees incurred by companies at listing will also be reduced.

A "KONEX Scale-up" fund worth 100 billion KRW will be established and invested to encourage institutional investors to play a leading role. The remaining resources of the existing "KOSDAQ Scale-up Fund" will be utilized. Support will also be provided for transfer listing consulting, exemption of KOSDAQ listing-related fees, and easing of technology evaluation burdens.

A financial authority official stated, "Items that can be implemented through amendments to Korea Exchange regulations, such as reforming the transfer listing system and easing listing burdens, will be implemented in the first quarter, while other measures such as abolishing the basic deposit and small investment-only account systems will be implemented in the first half of the year."

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