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The South Korean bourse operator vowed easier listing procedures for exchange traded funds, reducing to just 20 days the period for reviewing applications as opposed to 45 days previously.
Shortening the review period is the latest move by the exchange to bolster the growth of the ETF market in the country, says Won-Dae Kim, president and chief executive officer, KOSPI market division at the Korea Exchange.
Korea is one of Asia’s bustling ETF markets. As of end-May 2016, there were 211 ETFs listed on the KOSPI representing a total value of US$20 billion or 10% of the total trading value of the Korean stock exchange. Korea has listed 45 ETF products in 2015 and more than 70 so far this year.
Speaking at The Asset’s 2nd ETF Asia Summit, Kim reiterated the bourse’s plans for deepening the ETF market this year. These include expanding the foreign product line-up of ETFs in Korea and allowing for a dual-listing of ETF products on the exchange.
The Korea exchange had said previously that it plans to bring foreign providers such as SPDR Gold and iShares Silver Trust to the bourse. Moreover, it plans to encourage the launch of ‘active ETFs’ or ETF products that funds can actively manage. That will be among the first such ETF in Asia. Kim adds that other offerings being planned for launch this year include Smart ETFs.
The country is the fastest growing ETF market in Asia with annual growth of 35% in asset under management, thanks to supportive regulations.
The exchange had also noted in recent announcements plans to collaborate with Taiwan in cross-listing ETFs. The exchange is also seeking to collaborate in developing an index that can cover regional markets including Korea, Taiwan, Hong Kong, China, Japan and India. Currently, retail investors account for 43% of the Korean ETF market, while foreign investors cover 20%.
“The Korea Exchange, the financial authorities have made efforts to improve relevant rules and develop various new types of ETFs for investors' needs,” says Kim. “The exchange gave financial support to liquidity providers to promote active trading of products with low liquidity.”