Unlisted Stocks and Fractional Investment Brought into the Regulated System…Introduction of an OTC Exchange System

Trading in unlisted stocks and fractional investments will be formally incorporated into the regulated system.

The Financial Services Commission announced on the 16th (Korea time) that the Cabinet resolved an amendment to the Enforcement Decree of the Financial Investment Services and Capital Markets Act to introduce an OTC exchange (trading platform) system for unlisted stocks and fractional investments.

The amendment will be promulgated and take effect between the 23rd and 25th, and subordinate regulations will be amended together. With this amendment, trading in unlisted stocks and fractional investments, which had been operated in a sandbox format, is expected to be incorporated into the regulated system.

Accordingly, separate licenses will be required to operate OTC exchanges for unlisted stocks and fractional investments, and the minimum net capital requirement has been set at 6 billion won (3 billion won for professional investor-targeted services). After the amendment takes effect, sandbox operators Securities Plus and Seoul Trading will be given priority for licensing review.

Operational standards have also been established. Buy and sell quotes will be disclosed, and transactions between orders with matching prices will be executed transparently. In addition, investors can regularly check information such as audit reports for unlisted stocks and the operational status of fractional investments.

Furthermore, trading convenience will be improved. Previously, settlement was only possible within the same securities firm, but going forward, transactions between accounts at different securities firms will be allowed through linkage with the Korea Securities Depository.

The government expects that this institutionalization will improve unlisted companies' fundraising environment and increase investors' liquidity, leading to activation of the fractional investment market. The Financial Services Commission explained, "There are cases of investing in companies that take a long time to list, and trading platforms can mitigate the uncertainty of recovering invested funds."