Intensifying Competition and Differentiation Strategies in Korea’s ETF Market
As Korea’s ETF market continues its rapid expansion, competition among securities companies is becoming increasingly fierce. The Korea Exchange (KRX) has introduced a preferential index usage rights system, granting exclusive use of newly developed indexes to the first managing company for a set period. This initiative aims to prevent an overflow of similar ETF products and promote product differentiation, as exemplified by the recent case of Hana Asset Management’s '1Q 200 Bond Hybrid 50 Active' ETF, which received a three-month exclusivity period. However, the uptake of this system remains low, and some critics question its overall effectiveness.
At the same time, smaller asset management firms such as DS Asset Management have entered the market more actively, especially in response to the increasing prominence of active ETFs. Regulatory reforms in 2022 have also heightened the requirements for ETF listing reviews, placing a premium on the operational capabilities of asset managers. Ultimately, differentiated product structures and the ability to respond to regulatory changes are emerging as key competitive advantages, and ongoing growth and regulatory developments are set to significantly impact the industry going forward.
Related News
Due to the Proliferation of Similar ETFs… Initiatives to Differentiate Products by 'Index Preemption' - Financial NewsAs competition intensifies in the domestic Exchange-Traded Fund market, securities companies are taking the initiative to 'preempt indices' to block similar products for a certain period. When management companies develop a new underlying index that did not previously exist and aim to launch an ETF, they can apply for priority use of the index with the Korea Exchange. The exchange evaluates the originality of the index...
DS and Other Emerging Asset Managers Entering... Aiming at the ETF Niche Market - Seoul Economic DailyAs the domestic Exchange Traded Fund (ETF) market rapidly grows, emerging movements of new entries and re-entries from small and medium-sized asset managers are spreading, with DS Asset Management as a starting point. They are poised to lead changes in the market structure dominated by large companies by focusing on the fast-growing Active ETFs. As reported in the financial investment industry on the 26th.
Proliferation of Similar Products in Heated ETF Market...Will 'Priority Usage Rights' Be Expanded? - Financial NewsAs competition intensifies in the domestic exchange-traded fund (ETF) market, securities companies are stepping up to block similar products temporarily by securing 'index preemption.' Asset management companies can apply for priority usage rights of an index from the Korea Exchange when they develop new unique indices and intend to launch ETFs. The exchange evaluates the originality of the index...