FSC Selects 7 SME-Specialized Securities Firms... Longer Designation Periods and More Incentives

With the selection of specialized financial investment companies for small and medium-sized enterprises (SMEs) now complete, capital market-based fundraising for SMEs and venture businesses is expected to become more active. This is due to an increase in the designation period and more related incentives.

The Financial Services Commission announced on the 10th that it has designated seven securities firms—BNK Securities, IBK Securities, SK Securities, Leading Investment & Securities, Eugene Investment & Securities, Korea Investment & Securities, and Hanwha Investment & Securities—as the sixth round of SME-specialized financial investment companies. The designation period is three years.

The SME-specialized financial investment company system has been in place since 2016 to support SMEs and venture companies in raising funds through the capital market. To date, these companies have provided financial support totaling 17.9 trillion won to SMEs and venture businesses through bond issuance, paid-in capital increases, fund management, and equity investments.

The designation cycle has been extended from two years to three years. This change aims to enhance the predictability for SME-specialized financial investment companies and to increase incentives for medium- to long-term capital supply.

The Financial Services Commission also plans to expand incentives for SME-specialized financial investment companies. Starting next month, Korea Securities Finance Corporation will extend the maturity of securities-backed loans from a maximum of one year to three years and introduce preferential interest rates and longer maturities for term repurchase agreements (RPs) to diversify fundraising methods. Korea Development Bank and others will create exclusive funds for SME-specialized securities firms, and the incentive points for these companies in fund selection will be increased by more than 50% compared to the existing level. Additionally, when selecting asset managers for the National Growth Fund, incentive points will be introduced for certain categories such as the "Challenge" and "Small League" divisions. Furthermore, Industrial Bank of Korea plans to increase its investment in funds created by SME-specialized financial investment companies from 26.5 billion won to over 100 billion won.

A Financial Services Commission official stated, "If necessary, we will consider designating up to three additional SME-specialized securities firms during the sixth designation period."

This content was produced with the assistance of AI translation services.