Meritz Securities (008560) has won approval from the Securities and Futures Commission for its promissory note business, about a year and two months after it first applied for a license, following a months-long suspension of the review.
The commission approved the designation of Meritz Securities as a comprehensive financial investment business operator and its license for short-term financing operations, or the issuance of promissory notes, at a regular meeting the previous day, financial regulators said on the 17th. The license is likely to receive final approval at a regular Financial Services Commission meeting on the 23rd. If approved, Meritz Securities will become the ninth firm licensed for the business, after Mirae Asset Securities, Korea Investment & Securities, NH Investment & Securities, KB Securities, Kiwoom Securities, Hana Securities, Shinhan Securities and Samsung Securities (016360).
Meritz Securities, which originally filed for the license in July last year, had been scheduled for a commission review in April but was abruptly dropped from the agenda. Suspicions of unfair trading related to bonds with warrants issued by Ehwa Electric, which prosecutors are investigating, and improper business practices tied to its hub branches, which the Financial Supervisory Service is reportedly examining, are said to have contributed to the delay.
The review resumed, however, after Samsung Securities — which had also faced setbacks in its promissory note license review because of pending sanctions over hub branches — secured final approval last week, according to sources.
Promissory notes are issued with the customer as payee and the brokerage as payer at a yield agreed in advance, with maturities of up to one year. Brokerages can use the funds raised from customers as investment capital to expand their businesses. The issuance limit is set at 200% of a brokerage's equity capital.
Meritz Securities had equity capital of 8.3495 trillion won ($6 billion) on a separate basis at the end of the first half. On a simple calculation, that would allow the firm to raise up to about 16.7 trillion won.
