Exchange Announces Revision of ETP Listing Review Criteria... Index Calculators Must Also Prevent Conflicts of Interest

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[Asia Economy Reporter Lee Myunghwan] Going forward, internal control standards must also be established for individuals responsible for index calculation when reviewing the listing of Exchange-Traded Products (ETPs).

The Korea Exchange announced on the 5th that it plans to improve the listing review criteria for the ETP market through amendments to the detailed enforcement rules of the listing regulations.

Currently, during the listing review of Exchange-Traded Funds (ETFs) and Exchange-Traded Notes (ETNs), if the new listing applicant or interested party calculates the underlying index, the establishment of internal control standards is reviewed to prevent conflicts of interest between index calculation and product management.

The improved ETP listing review criteria newly include index calculation providers as subjects required to establish internal control standards. Accordingly, before index-related information is disclosed, index calculation providers must establish an internal control structure to prevent themselves or others from using the information improperly.

The Exchange plans to implement the revised review criteria from the end of July after collecting opinions from industry stakeholders.

An Exchange official stated, "Through this amendment to the detailed rules, we expect to play a preventive role to ensure that investors in the ETP market are not unilaterally harmed by conflicts of interest that may arise during index calculation."

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