The Korea Exchange (KRX) has introduced a new index licensing fee structure, which will now depend on the size of the structured products featuring the Kospi 200 and KTop 30 indices, as well as including a payment for using its trading system, Koscom, which may ultimately increase the listing fees for exchange-traded notes (ETNs).
“We have reformed the fee structure from a flat-rate to a fixed-rate system depending on the sales volume of structured products linked to the Kospi 200 index,” said an official at the KRX. “The details will be further discussed with institutions.”
The Korean exchange’s flat rate point was KRW30m (US$25,197) to KRW60m for institutions using the Kospi 200. However, with the new fee structure, providers will have to pay 0.01% to 0.02% of the size of a structured product, including equity-linked securities (ELSs), equity-linked warrants (ELWs) and ETNs.
The newly-launched KTop 30 will have a licensing fee of 1bp higher than that of the Kospi 200 index. Trading fees on KRX’s Koscom system have been increased to KRW10m, which is broken down into a development fee of KRW7m and maintenance payment of KRW3m.
The Kospi 200 index is the most widely used underlyings in South Korea’s structured products market, with 19,578 outstanding products linked to it. This year, 7,341 products linked to the Kospi 200 worth KRW24tr have been marketed locally.
The introduction of the new fee structure follows the exchange’s increase of its licensing fee for exchange-traded fund by 4bp last year.
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