Korea Investment & Securities and Mirae Asset Securities Named First IMA Providers, Product Launch Expected as Early as Early December

Kiwoom Securities Receives Promissory Note License
First Product Expected to Launch Within the Year

Korea Investment & Securities and Mirae Asset Securities have been simultaneously designated as the first “Integrated Investment Account (IMA)” operators, marking a significant step toward becoming the “Korean Goldman Sachs.” This comes eight years after the system was introduced. As early as the beginning of December, the first IMA product-which guarantees principal repayment while providing performance-based dividends-is expected to be launched.

On November 19, the Financial Services Commission reviewed and approved the designation of Korea Investment & Securities and Mirae Asset Securities as comprehensive financial investment business operators (with capital of at least 8 trillion won) and as IMA operators during its 20th regular meeting. The IMA, which is allowed for comprehensive financial investment business operators with capital exceeding 8 trillion won, is an account that guarantees principal repayment while seeking profits by investing client deposits in various sectors, including corporate finance-related assets (at least 70%).

On the same day, the Financial Services Commission also approved the designation of Kiwoom Securities as a comprehensive financial investment business operator with capital exceeding 4 trillion won and granted it a short-term financing license. As a result, the number of companies eligible to issue promissory notes has expanded to five: Korea Investment & Securities, NH Investment & Securities, KB Securities, Mirae Asset Securities, and Kiwoom Securities. Koh Youngho, Director of the Capital Markets Division at the Financial Services Commission, stated, “Through this, the public will have access to a wider range of investment vehicles, such as IMAs and promissory notes, and will be able to benefit from the asset management of comprehensive financial investment business operators.”

The market is closely watching which of the two newly designated IMA operators-Korea Investment & Securities or Mirae Asset Securities-will launch the first product. Koh emphasized, “Both companies will be the first IMA operators,” adding, “We are aiming for product launches within the year and expect the first product to be released as early as the beginning of December.” He also noted, “Due to intense competition between the two companies, it is difficult to disclose specific details.” When asked if the first product is likely to have a maturity of at least one year, he replied, “Yes.” Kiwoom Securities’ first promissory note is also scheduled for release within the year.

Whether additional IMA or promissory note operators will emerge remains a key question. NH Investment & Securities has also applied for IMA designation, but since it submitted its application at the end of September-later than Mirae Asset and Korea Investment & Securities-the review is still ongoing. However, there are concerns about whether approval will be granted, as a recent incident involving a senior executive using undisclosed information for unfair gains has made the company the target of the joint task force on stock price manipulation, raising issues about internal controls. However, unlike the approval for promissory notes, the IMA designation for operators with capital of 8 trillion won or more does not require the application of social credit requirements, such as the occurrence of financial accidents.

In the promissory note sector, on-site inspections are still underway for Samsung Securities, Meritz Securities, Shinhan Investment Corp., and Hana Securities. Promissory notes are a short-term financing tool issued by securities firms based on their own credit, allowing them to raise funds up to 200% of their equity capital. Regarding the possibility of additional IMA or promissory note operators, Koh stated, “Additional reviews are still in progress,” and added, “We will proceed as soon as the reviews are completed,” giving only a general response.

On this day, the Financial Services Commission also announced additional measures to expand the supply of venture capital by comprehensive financial investment business operators. First, to prevent a concentration of investment in relatively low-risk venture capital as operators fulfill their 25% venture capital supply obligation, only up to 30% of the required venture capital supply will be recognized for investments in relatively low-risk “A-rated bonds and mid-sized companies,” even if the actual investment amount exceeds this threshold. Koh explained, “We will first manage this through administrative guidance and later institutionalize it through amendments to relevant laws and regulations.”

The role of comprehensive financial investment business operators in supporting the KOSDAQ market infrastructure will also be strengthened. This decision is based on the recognition that enhancing the competitiveness of the KOSDAQ market is essential for a virtuous cycle in the venture capital ecosystem. Accordingly, newly designated operators-Korea Investment & Securities, Mirae Asset Securities, and Kiwoom Securities-will expand and operate dedicated departments for preparing research reports on KOSDAQ-listed companies, and the average number of reports issued by these three companies will be increased from around 300 to more than 450.

In addition, a public-private consultative body will be launched to more closely monitor compliance with venture capital supply obligations and to strengthen the venture capital supply capacity of comprehensive financial investment business operators. This consultative body, composed of the Financial Services Commission, Financial Supervisory Service, Korea Financial Investment Association, comprehensive financial investment business operators, and the Korea Capital Market Institute, will continuously monitor the status and plans for venture capital supply and share best practices.

The amendment to the Enforcement Decree of the Financial Investment Services and Capital Markets Act, aimed at promoting the flow of funds into productive sectors such as venture capital supply by comprehensive financial investment business operators, was approved at the Cabinet meeting the previous day. The amendment is scheduled to be promulgated and implemented between November 25 and 27. The main content of the amendment is to mandate that at least 25% of the funds raised through promissory notes and IMAs in the total assets managed by comprehensive financial investment business operators be supplied as venture capital. In addition to the previously announced scope of venture capital, investments in the National Growth Fund’s Advanced Strategic Industry Fund (such as fund-issued bonds and fund-invested funds) and BDCs have also been included.

The cap on real estate-related assets, which previously applied to promissory notes and IMAs, will be reduced from 30% to 10%. This change reflects the need to redirect the funds of securities firms, which have recently been heavily concentrated in real estate, toward more productive areas such as venture capital. In addition, to enhance the competitiveness of corporate finance conducted by comprehensive financial investment business operators, the scope of exclusive intermediation will be expanded from financial institutions, funds, and mutual aid associations to include venture capital (venture funds, new technology funds) and REITs, and the designation requirements for comprehensive financial investment business operators will be strengthened.