SEOUL, June 1 (Korea Bizwire) – A Korean version of the NASDAQ Private Market is expected to launch before the end of the year.
According to industry analysts, the Korea Financial Investment Association (KFIA) plans to present what it calls an ‘over-the-counter transaction platform for professional investors’. It plans to revitalize the pre-IPO market by providing a more exclusive platform for the ‘big boys’.
The platform was benchmarked off of America’s NASDAQ Private Market.
“The current K-OTC (Korea Over-The-Counter market) has its limits because it’s comprised mainly of private investors,” said Han Jae-young, the chief of K-OTC at KFIA. “Which is why we took the idea from the U.S. to build a new one.”
The new launch is expected to rapidly expand the size of the stagnant unlisted stock market.
“Corporate investors are not obliged to pay taxes for over-the-counter transactions,” said an industry official. “The turnover may well exceed our estimates once the exclusive market takes off.”
The KFIA launched the K-OTC in 2014 in an attempt to discourage over-the-counter transactions that took place in private markets with a high risk of fraud and price ambiguity. However, its daily turnover now stands at less than 500 million won, a decline from 1.5 billion won in August 2015.
The main reason for the rapid decline was the transfer tax imposed on private investors, which is approximately 10 percent of returns. The KFIA, along with its current project, plans to revitalize the K-OTC by pushing to abolish transfer taxes.
By Kevin Lee (email@example.com)