South Korea to introduce cornerstone investor lock-up mechanism to curb post-IPO sell-off wave

Odaily reports: South Korea's top financial regulator will introduce an initial public offering (IPO) cornerstone investor system to curb sharp declines in share prices after new listings. The Financial Services Commission (FSC) said that under the new system, which received government approval on Tuesday, institutional investors that commit to locking up their shares for at least six months will be allowed to receive stock allocations in advance.

The relevant rules will take effect on November 13 and will be implemented in tandem with amendments to the Capital Markets Act. The FSC said in a statement on Tuesday: "Introducing stable, longer-horizon institutional buyers before transaction pricing will help boost investor confidence in IPOs and alleviate the so-called 'IPO pricing' problem, in which holders rush to sell after a stock lists, causing share prices to fall sharply." (Jinshi)