ETF Market Shifts: Extended Trading Hours, Fee Policy, and Transparency Challenges
The Korea Exchange's initiative to extend trading hours in September has propelled concerns over managing ETF price discrepancies. Prolonged trading sessions may increase operational burdens on ETF market makers and fund managers, ultimately widening the gap between ETF market prices and underlying net asset values (NAVs). Industry observers highlight that this could undermine the price discovery function of ETFs and result in higher staffing and operational costs.
Meanwhile, Hana Asset Management has significantly raised the management fee on its new ETF product from 0.01% to 0.20%, aligning it with major competitors. This move follows regulatory efforts to curtail cutthroat fee competition among ETF providers by encouraging uniformity in fee structures for similar products. However, there are criticisms that aggressive marketing and ongoing promotion of low-fee benefits contradict the authorities' intentions.
Additionally, the Korea Exchange has decided not to disclose real-time indicative net asset values (iNAVs) for ETFs in pre- and after-market trading sessions. This policy addresses concerns that low liquidity periods could cause significant price-iNAV gaps, making fair value assessments difficult for retail investors. Market makers will instead rely on proprietary iNAV calculations, which should minimize overall market disruption. The exchange plans to monitor liquidity and pricing patterns before revisiting its disclosure policy.
Related News
ETF 'Emergency' as Stock Trading Hours Extended… How to Manage Disparity Rate? - E-DailyAs the Korea Exchange is pushing for an extension of trading hours in September, the asset management industry is highlighting the management of the disparity rate of Exchange-Traded Funds (ETFs) as a key issue. On the afternoon of the 14th, the KOSPI closed at 5967.75, up 159.13 points (2.74%) from the previous trading day (5808.62)....
Hana Asset Management Promotes 'Lowest' Fees Despite ETF Fee Increase...Contrary to Regulatory Stance - E-DailyHana Asset Management significantly raised the fees for its newly launched Exchange-Traded Funds (ETFs) just before their debut. It is interpreted as an adjustment to match the fee levels of previously listed competitors after financial authorities intervened in the ETF price-cutting competition. However, Hana Asset Management continues aggressive marketing claiming 'lowest fees', challenging the market ...
Exchange to Not Disclose ETF iNAV in Pre- and Aftermarket - Korea Economic DailyThe exchange will not disclose ETF iNAV in pre- and aftermarket due to concerns that liquidity shortage and anticipated high price volatility could distort indicators. LPs will submit quotes using their own calculated iNAV, making it difficult for individual investors to assess fair value.