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The commercial paper market, dominated by four major securities firms, could reach 100 trillion won if five pending applicants, including Samsung Securities, receive licenses this year. / Source: Yonhap News

Competition among securities firms for a share of Korea’s short-term commercial paper market is intensifying. Five brokerages — Samsung, Meritz, Shinhan, Hana, and Kiwoom — have applied for new licenses to issue commercial paper, aiming to break into a market currently dominated by four players: Korea Investment & Securities, KB Securities, NH Investment & Securities, and Mirae Asset Securities.

As of the end of March, these four firms held a combined 42.8 trillion won ($31 billion) in outstanding commercial paper, led by Korea Investment (17.6 trillion won), followed by KB (10.4 trillion won), NH (7.1 trillion won), and Mirae Asset (7.7 trillion won). This marked an increase of more than 5 trillion won from a year earlier.

Commercial paper, issued by full-service investment banks with at least 4 trillion won in capital, matures in under a year and is backed by the issuer’s own credit. A license allows firms to raise funds worth up to 200% of their equity, enhancing investment capacity, while offering higher interest rates than deposits to attract customers.

If all five pending applicants are approved within the year, the market could expand to nearly 100 trillion won. Analyst Kim Sang-in of Shinhan Investment & Securities estimates the newcomers could collectively raise up to 60 trillion won, on top of the current 43 trillion won held by incumbents.

The rush to secure licenses comes ahead of planned regulatory changes. The Financial Services Commission (FSC) announced in April that by 2028, 25% of commercial paper funding must be allocated to domestic venture capital, and the cap on real estate operations will be cut from 30% to 10% by 2027. From next year, licensing criteria for investment banks will also tighten, prompting firms to move quickly before the new rules take effect.

However, uncertainty has grown after the Financial Supervisory Service (FSS) reportedly asked the FSC’s agenda review subcommittee on July 17 to halt evaluations for some firms, citing the need to reassess factors such as internal controls, IT risk readiness, major shareholder creditworthiness, and conflict-of-interest management. The FSS described the suspension as temporary, with reviews typically reconsidered every six months, and noted that final licensing decisions rest with the FSC. The matter is expected to be revisited at the subcommittee’s next meeting on August 28.

An official from Samsung Securities, one of the applicants, said, “We thoroughly checked requirements and internal readiness before applying earlier this month. We are now waiting for the regulator’s review process to conclude.”