[Digital Today reporter Sang-yeop Oh] Competition among securities firms over interest rates is heating up as the market for issuing notes has grown to 54 trillion won.

According to the financial investment industry on Wednesday, Hana Securities recently raised the interest rate on its 1-year retail issuing notes to 3.30 percent, up 0.1 percentage point. It matched moves by Kiwoom Securities and Shinhan Investment Corp, which were selected as new operators late last year and raised rates first.

Existing operator NH Investment & Securities also raised its rate by 0.15 percentage point to 3.20 percent a year. The issuing-notes market now has 7 operators competing: the four existing firms Korea Investment & Securities, KB Securities, NH Investment & Securities and Mirae Asset Securities, plus Kiwoom Securities, Hana Securities and Shinhan Investment Corp.

Early results for the new operators have been good. The second tranche of Hana Securities' 'Hana THE Issuing Notes' sold out in a special sale within 10 days of launch, and the first tranche was also exhausted in a week.

A special sale of Shinhan Investment Corp's 'Shinhan premier Issuing Notes' ended after selling out in a day and a half. Kiwoom Securities also sold out its first product in a week.

Issuing notes are popular with investors for a reason. They often offer higher interest rates than bank deposits and savings products, and maturities are short at under 1 year, allowing flexible cash management.

Because they are principal-and-interest guaranteed products based on a securities firm's credit, they also draw interest from investors who value stability. The industry sees these features as enabling issuing notes to absorb retail funds quickly and become a major funding tool for securities firms.

Total outstanding issuing notes across the market amount to 54 trillion won. The combined balance of the four existing firms alone stood at 47.7896 trillion won as of the third quarter of last year, led by Korea Investment & Securities with 18.7010 trillion won, followed by KB Securities with 11.3812 trillion won, NH Investment & Securities with 9.4410 trillion won and Mirae Asset Securities with 8.2634 trillion won. Their market shares are 39.1 percent, 23.8 percent, 19.8 percent and 17.3 percent, respectively.

Although the market is expanding rapidly, reviews of issuing-notes approvals for Samsung Securities and Meritz Securities have yet to be concluded. In July last year, the two companies applied to the Financial Services Commission for approval to issue notes, along with Kiwoom Securities, Shinhan Investment Corp and Hana Securities.

Kiwoom Securities received approval in November that year, and Shinhan Investment Corp and Hana Securities received approval in December, but Samsung Securities and Meritz Securities have yet to clear the final hurdle.

An analysis says Samsung Securities' review is being affected by a sanctions history in which the Financial Supervisory Service decided on a 6-month business suspension for some branches and minor disciplinary measures for executives and employees. The background was that violations were found during inspections of branches serving ultra-high-net-worth clients.

For Meritz Securities, judicial risk related to transactions involving Ewha Electric's bonds with warrants is cited as a burden factor. Prosecutors are still investigating allegations that it exercised a large volume of the bonds with warrants using undisclosed information and sold shares it held before Ewha Electric shares were suspended from trading.

The financial authorities have not officially specified reasons for the delayed reviews. The government has recently been seen focusing all efforts on controlling inflation amid war in the Middle East and a resulting surge in oil prices. Some say the issue has naturally been pushed down the authorities' priority list.

The industry expects results could come as early as April.

Park Jong-moon (박종문), chief executive of Samsung Securities, said at the company's shareholder meeting on March 20, "It is difficult to comment because the review of approval to issue notes is under way." He added, "We are doing our best to enter the issuing-notes business, and if it does not work out, we will find a way forward at the next opportunity."

Meritz Securities has also said at its shareholder meeting held on March 26 that preparations are complete to the point where it can launch products immediately once it receives approval.