A preparatory company called Nexchange, which will handle over-the-counter distribution of fractional investment products, has officially launched. It plans to start with music intellectual property (IP), aircraft engines and real estate loan receivables, then expand trading to artworks, webtoons and performances.

Twenty-one investing institutions, including Nextrade, said on Sept. 29 they held an inaugural general meeting for Nexchange Co., a preparatory company that will run an over-the-counter exchange for fractional investment. The meeting approved the articles of incorporation and appointed directors. A board meeting held afterwards appointed Jung Yoo-shin (정유신), a specially appointed professor at Sogang University’s Graduate School of Business, as the first chief executive.

Nexchange was established to build an over-the-counter distribution market where fractional investment products can be traded. The Nextrade (NXT) consortium previously applied for preliminary approval for an investment brokerage business for beneficiary certificates in October last year, and received the approval on Feb. 13. It applied for final approval on Aug. 10.

Five founding companies participated as shareholders: Nextrade, Musicow Invest, Shinhan Investment Corp, Blueward and Samsung Securities. Fractional investment firms including Sejong DX, Stockeeper, Together Art and ArtToken, as well as Hana Securities and Hanyang Securities, also invested.

Shareholders also include small and medium enterprise-focused securities firms such as IBK Investment & Securities, SK Securities, Eugene Investment & Securities, Korea Asset Investment Securities and Hanwha Investment & Securities, along with IT and ratings firms including Aton, Blockchain Global, J1 Capital Invest, SCI Seoul Credit Rating and Seoul Credit Information.

Jung Yoo-shin (정유신), a specially appointed professor at Sogang University’s Graduate School of Business, was appointed as the first chief executive. Jung previously served as a vice president at Shinhan Financial Investment, chief executive of Standard Chartered Securities Korea, chief executive of Korea Venture Investment and head of the Korea Fintech Support Center.

Outside directors appointed were Lee Moon-young (이문영), a professor in the accounting department at Duksung Women’s University, and Lee Bong-heon (이봉헌), a former executive director at the Korea Financial Investment Association. Other non-executive directors include Kim Hak-soo (김학수), Nextrade’s chief executive, and Han Il-hyun (한일현), head of Shinhan Investment Corp’s AX division.

Nexchange is focusing on improving low liquidity and the difficulty of price discovery, which have been cited as limitations of the fractional investment market.

To do so, it is pushing plans to introduce 12 hours of trading a day, low fees and various quote methods. It also plans to build an investor protection framework, including market stabilisation measures and an investor protection fund, and to cooperate with related institutions such as issuers, securities firms and the Korea Securities Depository.

Initial trading targets are fractional investment products such as music IP, aircraft engines and real estate loan receivables. It plans to gradually expand the product range to include artworks, webtoons, performances and sales receivables.

Jung said, "I will push ahead without disruption to obtain final approval for an investment brokerage business for beneficiary certificates so that Nexchange can establish itself as a trusted distribution infrastructure for the fractional investment market."

He added, "After final approval, I will do my best to support the sound growth of the fractional investment market through stable market operations and expanded trading products, and to establish Nexchange as the core distribution infrastructure for the domestic fractional investment market."