Korea Exchange Announces Revision of ETP LP Evaluation Criteria

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[Asia Economy Reporter Minji Lee] The Korea Exchange announced on the 21st that it plans to improve the evaluation criteria for LPs in the ETP (ETF·ETN) market through amendments to the Enforcement Rules of the Business and Listing Regulations.

Under the current criteria, LPs of securities that violate the spread ratio or premium/discount ratio regulations for two consecutive quarters (two months for ETNs), regardless of the LP evaluation results, have been assigned the lowest grade.

Going forward, the Exchange plans to amend the Enforcement Rules of the Business Regulations to allow exceptions when unavoidable circumstances such as sudden market changes are recognized during the assignment of evaluation grades. Additionally, it will revise the Enforcement Rules of the Listing Regulations to remove redundant expressions in the LP evaluation score calculation and deduction items within the operational capability evaluation section for new listing applicants.

After a public consultation process with industry stakeholders on the 7th, the amendments are scheduled to take effect from July 1. The Exchange stated, "Through this amendment to the enforcement rules, ETP LPs will be able to offer quotes more favorable to investors."

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