[Provided by the Financial Services Commission]
[Provided by the Financial Services Commission]

South Korea's Financial Services Commission has designated seven new firms as sixth-cohort SME-specialized financial investment companies to strengthen capital market support for small and medium-sized enterprises and venture businesses.

The FSC announced Friday that BNK Investment Securities, IBK Investment Securities, SK Securities, Leading Investment Securities, Eugene Investment Securities, Korea Asset Investment Securities and Hanwha Investment Securities had been selected for the designation. The three-year designation runs from Friday through July 9, 2029.

The number of designated firms fell to seven from eight in the previous fifth cohort. The FSC said the reduction reflected a rigorous capability review that prioritized the appropriateness and practical effectiveness of each designation over sheer numbers, noting that the SME-specialized brokerage regime has been in place for more than a decade.

The government is also expanding incentives alongside the sixth-cohort designation. Starting next month, Korea Securities Finance will extend the maximum maturity on securities-backed loans to three years and introduce a preferential rate system for term repurchase agreements.

Korea Development Bank plans to establish a dedicated fund of 50 billion won ($33.1 million) for SME-specialized brokerages within the year and will increase the bonus points awarded to those firms in fund manager selections by more than 50 percent compared with the current level. Bonus points for SME-specialized brokerages will also be newly introduced in certain leagues — including the regional fund league — when selecting managers for the National Growth Fund.

Industrial Bank of Korea plans to expand its capital contributions to funds formed by SME-specialized brokerages from 26.5 billion won to at least 100 billion won.

The SME-specialized brokerage regime was introduced in 2016 to support small and medium-sized enterprises and venture companies in raising funds through capital markets and to nurture small and mid-sized brokerages with expertise in related financial services.

The FSC selects designees through quantitative and qualitative assessments conducted by a selection committee of outside experts. Evaluation criteria include track records as designated advisers on the Konex market and performance in initial public offerings for small and medium-sized enterprises and venture companies.

Over roughly a decade since the regime's introduction, SME-specialized brokerages have channeled a combined 17.9 trillion won to small and medium-sized enterprises and venture companies — comprising 9.2 trillion won through bond issuances, IPOs and rights offerings; 7.3 trillion won through fund management, direct investment and capital contributions; and 1.3 trillion won in mergers and acquisitions advisory.

The FSC said relevant agencies would push ahead without delay with follow-up measures to help the new incentives for SME-specialized brokerages take hold quickly, adding that the FSC and the Financial Supervisory Service plan to review the support performance of SME-specialized brokerages on a semiannual basis to encourage active venture capital supply.

The commission added that it would consider designating additional SME-specialized brokerages within the sixth-cohort designation period if necessary.


moon@heraldcorp.com