Securities Industry: "We Will Absorb ABCP Ourselves"

[Image source=Yonhap News]

[Asia Economy Reporter Hwang Junho] The securities industry agrees on the need for joint efforts at the industry level to absorb asset-backed commercial papers (ABCP) held by securities firms in order to overcome liquidity crunches, and has agreed to establish a second bond market stabilization fund.

On the 27th, according to the Korea Financial Investment Association, this agreement was reached at an "Emergency CEO Meeting" attended by CEOs of comprehensive financial investment business operators including Mirae Asset, Meritz, Samsung, Shinhan Investment, Kiwoom, Hana, Korea Investment, NH Investment, and KB Securities.

The attendees agreed that liquidity across the real and financial sectors is showing signs of short-term tightening, not only in the corporate bond market for general companies' fundraising but also in the real estate PF securitization market and the short-term funding markets of securities and credit businesses.

In particular, they unanimously agreed that the market stabilization role of comprehensive financial investment business operators with sufficient funding capacity is necessary to prevent the liquidity crisis stemming from simultaneous tightening in asset and funding markets from spreading throughout the securities industry.

Accordingly, after discussing measures to contribute to the stabilization of the real estate PF securitization market and short-term funding markets, it was judged that there is a need for joint efforts at the industry level to absorb ABCP held by securities firms. They further agreed to promptly decide on detailed implementation plans and support scale and to execute them.

Chairman Na Jae-cheol and the CEOs stated, "To stabilize the financial market, which has become difficult due to worsening external conditions, the securities industry will also do its utmost."

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