[DigitalToday reporter Sang-yeop Oh] Meritz Securities is set to become the ninth issuer of short-term notes. It has passed a review by the Securities and Futures Commission under the Financial Services Commission and now awaits only the final vote at the FSC’s regular meeting.

The financial investment industry said on Sept. 17 that the Securities and Futures Commission held its regular meeting the previous day and reviewed and approved Meritz Securities’ application for a short-term financing business license.

Meritz Securities’ short-term note license proposal, which cleared the SFC review, is expected to be finally decided at the FSC’s regular meeting on Sept. 23.

Meritz Securities was initially expected to undergo the SFC review in April together with Samsung Securities, but its schedule was pushed back after it was excluded from the agenda.

Samsung Securities later completed its licensing process first. The FSC made the final decision on Samsung Securities’ short-term financing business license proposal on Sept. 9, and Samsung Securities is set to start selling its first short-term note product from Sept. 21.

If Meritz Securities also receives final approval, the number of short-term note issuers will rise to 9 firms.

That would mean licensing procedures have been completed for all 5 securities firms that have been pursuing entry into the short-term note business: Kiwoom Securities, Hana Securities, Shinhan Investment Corp, Samsung Securities and Meritz Securities.

Short-term notes are short-term financial products with maturities of up to 1 year that are issued based on the issuer’s own credit by a mega investment bank with equity capital of at least 4 trillion won. A licensed securities firm can raise large funds based on its equity capital and use them for corporate finance and other purposes.

For securities firms, a benefit is securing an additional funding tool in the form of short-term notes alongside repurchase agreements, commercial paper and corporate bonds. They are considered one of the core businesses of mega investment banks as they allow firms to expand corporate finance and venture capital investment based on client funds.

Financial authorities are also strengthening related management obligations so that funds raised through short-term notes and integrated investment management accounts flow into corporate finance and venture capital.

If Meritz Securities joins the short-term note market, competition among large securities firms to raise funds, as well as competition in corporate finance and venture capital investment, is expected to intensify further.