Korea Securities Finance Expands Liquidity Support for Securities Firms

Proactive Liquidity Funding Support to Securities Firms in Response to Short-Term Money Market Instability

[Asia Economy Reporter Oh Ju-yeon] Korea Securities Finance announced on the 26th that it is supporting the liquidity of securities companies by raising additional large-scale funds due to the emergence of instability factors in the short-term money market caused by the novel coronavirus infection (COVID-19).

As of the 25th, Korea Securities Finance prioritized support totaling 3.5 trillion won, using funds procured through the Bank of Korea RP (2.5 trillion won) and Korea Securities Finance's own funds (1 trillion won), including RP of 500 billion won, secured loans of 1.8 trillion won, and increased discounted bills by 1.2 trillion won.

In particular, for securities companies with insufficient collateral capacity, RP and secured loans are provided using not only high-quality collateral such as government and public bonds but also corporate bonds and CPs as collateral, and discounted bills (credit loans), which were usually supported at a scale of 600 to 700 billion won, are increased to 1.8 trillion won.

Separately, despite the liquidity crunch in the securities market, intraday funds (credit loans) required for securities companies' settlement funds are continuously supplied at a scale of 2.1 trillion won, and starting next week, about 1.5 trillion won will be supported as secured loans using investor deposit funds.

A Korea Securities Finance official stated, "If additional liquidity support is needed for securities companies depending on future market fluctuations, we will continue to prepare support measures through securing separate funds and additional Bank of Korea RP procurement."