Approval for Fractional Investment OTC Marketplace Halted Amid Controversy... FSC Postpones Preliminary Review

The Financial Services Commission has postponed the final approval review for the over-the-counter (OTC) marketplace for fractional investment. This move appears to be a result of LucentBlock raising concerns over the fairness of the process.

According to financial authorities on January 14, the Financial Services Commission did not include the 'preliminary approval application for the OTC marketplace for fractional investment' on the agenda of its regular meeting that day.

On January 7, the Securities and Futures Commission under the Financial Services Commission had reviewed and resolved the preliminary approval application for the OTC marketplace for fractional investment, and it was expected to be discussed at the regular meeting on January 14. However, the discussion has been postponed to a future meeting.

Initially, the Securities and Futures Commission reportedly selected the 'KDX Consortium' led by Korea Exchange (KRX) and the 'NXT Consortium' led by Nextrade (NXT), while the LucentBlock Consortium was effectively eliminated. The Financial Services Commission had previously announced that it would select up to two out of the three applicants for the OTC marketplace business license.

This postponement is seen as a result of LucentBlock holding a press conference on January 12 to publicly raise issues regarding the fairness of the preliminary approval process.

At the time, LucentBlock CEO Heo Seyoung argued, "Administrative procedures and market restructuring centered on vested interests during the institutionalization process completely contradict the intent of the legislation," claiming that the approval process lacked fairness. He also raised suspicions that NXT had signed a non-disclosure agreement (NDA) with LucentBlock prior to applying for the business license and subsequently misappropriated its technology.

LucentBlock has stated that it agrees with the intent behind the financial authorities' decision and will actively participate in any additional procedures if required. CEO Heo Seyoung said, "We understand the Financial Services Commission's intention to conduct a thorough review. If there are any additional requests during the re-examination or final announcement process, we will faithfully comply with the relevant procedures and actively cooperate."

He added, "We hope that this review process will conclude in a way that faithfully reflects the original purpose of the Special Act on Financial Innovation Support and the intent behind the introduction of the system."