Exchange "Abolishes Disclosure Obligation When Replacing ETF Constituents Exceeding 1% of Net Asset Value"

Korea Exchange Announces Revision of ETP Listing Rules
Introduction of Bond ETFs with Fixed Duration
Reorganization of Listing Review Regulations for ETF, ETN, and ELW

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[Asia Economy Reporter Myung-hwan Lee] Starting from the end of August, the disclosure obligation for replacing stocks exceeding 1% of the total net asset value will be eliminated. Bond-type exchange-traded funds (ETFs) with a fixed duration will also be introduced.

The Korea Exchange announced on the 21st that it plans to revise the listing regulations and enforcement rules of the KOSPI market to include easing ETF disclosure obligations, introducing new products, and reorganizing the listing review regulations for exchange-traded products (ETPs).

The Exchange explained the background for easing ETF disclosure obligations by stating, "Investors can check daily changes in asset composition and real-time fluctuations in net asset value through the paid asset composition details (PDF) and intraday net asset value (iNAV)," and added, "the reporting obligation for replacing stocks exceeding 1% of the ETF’s total net asset value, which places excessive burden on issuers compared to the information provision effect to investors, will be abolished."

Bond-type ETFs with a fixed duration will also be introduced. Currently, the Exchange’s listing regulations prohibit setting a fixed duration for ETFs, but if the fixed duration is separately stated in the collective investment agreement of the bond-type ETF, the listing of ETFs with a fixed duration will be allowed. However, products with a fixed duration will be limited to bond-type ETFs. When delisting occurs due to expiration of the fixed duration, a delisting notice from the Exchange and a reporting obligation for the ETF listing corporation will be newly established.

To ensure consistency in the listing review regulatory framework, the listing review regulations for ETFs, exchange-traded notes (ETNs), and equity-linked warrants (ELWs) will also be reorganized in accordance with business procedures. The main content is to revise provisions that were described differently for each product in the listing regulations and enforcement rules.

The Exchange plans to implement the revised regulations from the end of August after collecting opinions from stakeholders and market participants and obtaining approval from the Financial Services Commission. A representative of the Exchange stated, "We expect that this revision will satisfy diverse investment demands of investors and enhance the satisfaction of market participants."

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