Daishin Securities (003540) will pay interest on subscription deposits that investors place with the brokerage when applying for initial public offerings. The move is intended to expand customer benefits by paying interest on funds tied up for a set period during the IPO subscription process.
The brokerage said on the 23rd that it will pay an annual rate of 1% on subscription deposits of up to 1 million won and 0.6% on amounts above that threshold. The new interest terms apply to companies that filed securities registration statements on or after Sept. 21.
Given that institutional book-building and retail subscriptions follow sequentially after a registration statement is filed, the first IPO subscriptions eligible for interest are expected to emerge next month.
Subscription deposits are funds investors place with a brokerage to secure an allocation of newly issued shares. For IPOs that draw strong market interest, trillions of won can pour in over just a few days. Daishin Securities expects investors to receive greater tangible benefits by earning interest while their money sits with the brokerage during the subscription period.
The change comes as Daishin Securities has been rolling out customer-friendly measures to lower various financing costs borne by clients. In July, the brokerage cut the rate on loans secured by pending sale proceeds — which allow clients to receive proceeds from a stock sale before the settlement date — to 5.0% a year. It also lowered the penalty interest rate applied to unsettled account balances, easing cost burdens for investors.
"We decided to pay interest on subscription deposits in order to provide benefits even during the period when customer funds are held with us in the IPO subscription process," said Lee Yong-wook, head of the wealth management development division at Daishin Securities. "We will continue to expand services that deliver tangible benefits to customers."
