“20% of privately allocated public stocks → 30% of the maximum … Introduction of the equalization method”

[한국금융신문 정선은 기자] A system reform direction has been proposed to expand the allocation of public offering shares to general (individual) subscribers from the current 20% to a maximum of 30%.

Lee Seok-hoon, senior researcher at the Capital Markets Research Institute, presented improvement plans based on these details during the discussion on “ Public Stock Allocation and IPO (Company Disclosure) System Improvement ” held at the Yeouido Financial Investment Education Center hosted by the Financial Investment Association.

Among the recent strong demand for investment in public offering shares, how to allocate the amount has emerged as a key issue. Authorities are looking to improve the system as they point out that opportunities for small investors are limited.

According to the proposal announced by the Korea Capital Markets Institute, the allocation ratio of high-yield funds was reduced from 10% to 5% in order to increase the allocation of general subscribers and the change in the amount not included was included. subscribed employee shareholding of up to 5% to the volume of general subscribers.

In this case, the share of the volume of the public offer assigned to ordinary investors will go from the current 20% to a maximum of 30%.

In addition, the introduction of an equalization method for the individual volume of general subscribers was also included. This is based on the fact that the opportunities for participation by generic subscribers with no subscription margin are limited and competition for subscription margin is overheated.

It is currently customary to allocate in proportion to the number of subscribed shares (subscription margin), but a plan has been proposed to allocate more than half of the allocated amount to general subscribers by adopting an equalization method and in parallel with the current margin standard.

In addition, a plan was also proposed to ban duplicate subscriptions by establishing a separate IT system.

In addition, the day’s improvement plan included a plan to increase the allocation efficiency of institutional investors. In order to give preferential treatment to institutional investors who have contributed to the discovery of prices and the stabilization of the share price, the “ Guidelines for the new allocation of shares for institutional investors ” and designated institutional investors have been prepared in advance by the host company allocate and hold a portion of the public offering shares of the IPO companies for a long time. The introduction of the “cornerstone investor system” was included.

It also included inducing the activation of “over-allocation options” to protect investors by responding more flexibly to market demand after listing.

The overallocation option is a system where the host borrows 15% of the shares and overallocates them. As new shares can be issued with the exception of the final purchase volume after the market adjustment, the offer amount can be adjusted according to the investment demand and share price of the public offering at the start of the listing and a sharp drop in the price of public offerings or volatility can be mitigated but has not been used in practice.

In the capital market research institute’s improvement plan, a plan for the deregulation of overallocation options has been proposed, in which the purchase price on the market is between 90% and 80% or more of the Bid Price.

However, during this day’s debate, experts said that enough overhaul is needed to increase the number of individuals.

Dongguk University Professor Jeon Jin-gyu said, “As the overall allocation volume increases and the organization’s share decreases, competition becomes fiercer, so it is difficult to form an appropriate public offering price,” he said. said. “The overall competition rate is quite unpredictable and may not be digested. Securities companies need to take care of it, and if they fail to sell real rights, it could affect the stock price after listing.”

In addition, Sungkyunkwan University Professor Song Gyo-jik said: “It’s a hot market. Should we change the system now? This should be carefully considered.” I don’t think it is. ”

Reporter Jeong Sun-eun [email protected]