[Promissory Note Debut]① Up to 9 Securities Firms to Compete This Year... More Options for Investors

Seven Securities Firms Enter the Market; Samsung and Meritz Under Review
Following Kiwoom and Hana, Shinhan to Launch First Product Next Month
Attracting Customers with Short-Term Investment; Contract-Based Products Offer Over 3%
Impact Exp

The Korean securities firms' promissory note market has entered a new phase. With Kiwoom Securities, Hana Securities, and Shinhan Investment & Securities having received approval from financial authorities at the end of last year, these firms have now officially entered the market, rapidly shifting the landscape into a "seven-way competition." As these new players enter the market, competition over interest rates and product differentiation is expected to intensify, making "management of funding risk" by each firm a crucial factor. The effects are expected to extend beyond the competitive dynamics among securities firms to impact overall capital flows in the capital market.

According to the financial investment industry on January 19, Kiwoom Securities and Hana Securities launched their first promissory note products in December of last year and January of this year, respectively, officially joining the market. Both firms attracted attention by successfully raising initial funds with relatively high interest rates and short-term maturities. Shinhan Investment & Securities, which received approval at the same time as Hana Securities, is also planning to introduce its first promissory note product next month. Currently, the domestic promissory note business consists of seven firms: the four existing players-Korea Investment & Securities, Mirae Asset Securities, NH Investment & Securities, and KB Securities-plus the three newly approved companies. In addition, Samsung Securities and Meritz Securities are currently under review, raising the possibility that the number of participating firms could increase to as many as nine within the year.

Industry insiders and observers predict that the entry of new players will further intensify competition over interest rates and product differentiation in the promissory note market. Various types of promissory notes are already flooding the market, including special high-interest offers and products with on-demand withdrawal features, and existing firms are defending their positions by offering even higher rates.

Promissory notes, which allow securities firms to raise short-term funds quickly and relatively securely based on their own capital, are considered to have simpler procedures and greater operational flexibility compared to issuing public bonds. The funds raised can be channeled into high-yield investment banking (IB) businesses such as corporate finance, acquisition finance, and project financing (PF), making promissory notes a core infrastructure for the mid- to long-term growth strategies of securities firms.

From an investor's perspective, the main advantages are higher interest rates and shorter maturities compared to bank deposits and savings accounts. Although they are not protected by deposit insurance, their short maturities and high liquidity make them a useful option for managing idle funds through securities accounts. Some special contract-based products have offered interest rates in the mid-3% range, while on-demand withdrawal products have offered rates in the 2% range. Accessibility for individual investors is also considered high, thanks to mobile and non-face-to-face subscription channels.

The key issue is how each firm will manage the operational risks of the funds they raise amid intensifying competition. If all new entrants currently under review obtain approval to issue promissory notes, the theoretically possible new funding amount is estimated at around 64 trillion won. Hana Securities researcher Ko Yeonsu commented, "In the mid- to long-term, as the government's policy to promote the supply of venture capital becomes more active and securities firms ramp up risk underwriting, we will see performance differentiation among firms based on their ability to select high-quality assets and manage risk."

Experts point out that, given the short maturities of promissory notes, managing maturity mismatches between short-term funding and mid- to long-term operations is crucial. As the government, emphasizing "productive finance," openly calls for securities firms to play a greater role in supplying venture capital, it is essential that they fulfill this responsibility.

In particular, the impact of promissory notes is expected to extend beyond competition among individual securities firms to significantly influence capital flows across the entire capital market. As securities firms expand funding based on their own capital, changes are expected in the flow of funds within the corporate bond and commercial paper (CP) markets. If funds raised through promissory notes are actively funneled into risk assets such as project financing and acquisition finance, the supervisory role of financial authorities will inevitably become even more important. Some observers warn that if promissory note funds become concentrated in specific IB areas, the risks among securities firms could simultaneously increase during economic fluctuations.

A senior industry official stated, "If last year was about securing approval, this year will see intensified competition in product launches and deposit gathering," adding, "2026 will be the 'year of funding competition' among securities firms, centered on promissory notes and integrated management accounts (IMA)."