FSC's 'maximum two' cap decision draws scrutiny

CEO Heo Se-young calls for fair competition, not preferential treatment

Lucentblock CEO Heo Se-young speaks at a press conference held Tuesday at Maru180 in Gangnam-gu, Seoul. [Lucentblock]
Lucentblock CEO Heo Se-young speaks at a press conference held Tuesday at Maru180 in Gangnam-gu, Seoul. [Lucentblock]

Lucentblock, the operator of real estate fractional-investment platform "Soyu," is calling on regulators to grant additional licenses for fractional-investment over-the-counter exchanges. The company says the Financial Services Commission's decision to cap the number of licensed OTC exchange operators at two effectively shut out Lucentblock — an existing market participant — and is demanding that the FSC clarify how and by whom that limit was set.

CEO Heo Se-young held a press conference Tuesday at Maru180 in Gangnam-gu, Seoul, urging financial authorities to move quickly on additional licenses. "We are not asking for another operator's license to be revoked," Heo said. "We are asking for the opportunity to compete fairly in the market."

Lucentblock is questioning the process behind the FSC's decision to cap the number of licensed fractional-investment OTC exchange operators at two. The company said the FSC must clearly disclose who made that decision and through what procedure.

According to the company, the cap on the number of licenses was handled as a reporting item — not a voting item — at the FSC's regular meeting in September last year, and the meeting materials at the time described it only as an example: "principle of up to two." Yet the FSC announced in a press release the following day that it would license up to two operators. Lucentblock also took issue with the fact that the FSC initially told the National Assembly the cap had been formally approved at the regular meeting, only to later correct that to "reported and discussed."

The company also said the proper licensing procedure for innovative financial service providers was not followed. Under the Special Act on Support for Financial Innovation, a company designated as an innovative financial service provider may apply for a license before its designation period expires and receive input from the relevant review body — a step Lucentblock said was skipped in this process. The company argued that its track record operating a retail distribution service for investors since its innovative financial service designation in 2021 should have been taken into account during the institutionalization and licensing review.

"We want fairness and transparency, not preferential treatment," Heo said. "We still hope the financial authorities will make the right policy call." The company said it is pursuing additional licenses while also considering legal action.

Earlier this year, the FSC selected two preliminary licensees for fractional-investment OTC exchanges in February: the KDX consortium led by Korea Exchange and the NXT consortium led by Nextrade. Lucentblock received a score of 653 points from the external evaluation committee, below the NXT consortium's 750 points and the KDX consortium's 725 points. The FSC has said it selected the two operators based on a comprehensive assessment of equity capital, business plans and conflict-of-interest prevention frameworks.

As the controversy persisted, FSC Chairman Lee Eok-won said at a comprehensive audit of the National Assembly's Political Affairs Committee on Thursday that he would review the possibility of granting additional licenses if market conditions warranted it.


kacew@heraldcorp.com