Collective investment products, previously issued based on a single asset such as artwork or music tracks, will now be allowed to include multiple assets of the same type. Additionally, future receivables whose rights can be specified based on already concluded contracts, among other instruments, may also serve as underlying assets for collective investment if they meet certain conditions. While expanding the scope of underlying assets, financial authorities have also detailed investor protection standards, including limits on retail investors' subscription quotas, allocation of public offering volumes, and disclosure requirements.
On the 4th, the Financial Services Commission announced its policy direction for tokenized securities and simultaneously released a "Model Rule for Issuance of Non-Monetary Trust Beneficiary Securities" containing these provisions. This rule was developed to prepare for the anticipated activation of the collective investment market following the implementation of the tokenized securities system, by specifying requirements for underlying assets and standards for public offerings and investor protection. The model rule applies not only to tokenized securities but also to currently issued collective investment products in electronic security form.
Collective investments are categorized into non-monetary trust beneficiary securities and investment contract securities. While both involve multiple investors sharing investment in an underlying asset or business, non-monetary trust beneficiary securities utilize the existing trust system targeting assets eligible for trust. Investment contract securities, by contrast, directly distribute profits and losses from joint ventures to investors without going through a trust structure. Non-monetary trust beneficiary securities have been issued in practice based on real estate and music tracks under regulatory sandboxes until now.
The most significant change is the conditional allowance of pooling underlying assets. While previous guidelines restricted underlying assets to a single asset as a general rule, the Financial Services Commission's model rule now permits multiple assets to be included in one collective investment product if certain conditions are met.
The scope of pooled assets is limited to those of the same type and holding identical rights. Investors must clearly understand the criteria and purpose for bundling assets, and information on individual asset prices, risks, and return structures must be provided separately. The same valuation method must be applied across all assets, and distressed assets cannot be included. The number of assets that can be bundled and the maximum trust value shall be determined within a range that poses no risk to investor protection, taking into account the characteristics of the underlying assets.
For example, music copyrights may be grouped by right type—such as separating property rights from neighboring rights—but only assets with identical rights may be combined. The model rule provides examples such as bundling assets within a single album or a representative song by one artist, or combining an aircraft's main engine with its emergency spare engine.
Assets linked to uncertain events, such as future receivables, are also permitted under certain conditions. This applies when there exists a foundational legal relationship—such as already concluded supply or sales contracts—that allows rights to be specified; when occurrence in the near future is highly probable; and when enhanced investor protection measures, including credit enhancement, are in place.
However, not all assets qualify as underlying assets for collective investment. Residential properties tied to real estate policies such as LTV (Loan-to-Value ratio) and DSR (Debt Service Coverage Ratio), as well as commercial properties used for residential purposes, are generally excluded. Assets related to gambling industries like casinos and those deemed to carry significant social or economic side effects are also excluded from eligibility.
While expanding the scope of underlying assets, the Financial Services Commission has also detailed standards for public offerings and investor protection. Issuers and investment intermediaries must generally incorporate allocation procedures such as equal allocation and proportional allocation into their internal regulations to ensure retail investors can participate fairly in subscriptions. The model rule provides examples including setting minimum ratios for allocations to retail investors out of total offering volumes, as well as minimum ratios for equal allocations within those portions, in advance.
Subscription limits per retail investor shall be set according to product characteristics. As a general principle, the Financial Services Commission will determine limits based on factors such as the type of underlying asset and issuance scale. A standard example includes applying the lower of 30 million won or 5% of the total issuance amount. The model rule also includes cases where no subscription limit is imposed on qualified investors.
Certain responsibilities have also been assigned to asset holders. To prevent the securitization of distressed assets, asset holders must compulsorily retain at least 5% of beneficiary securities issued in accordance with standards set forth in the Asset Securitization Act until the termination of the trust.
Disclosure obligations have also been specified. Issuers of beneficiary securities traded in secondary markets must prepare quarterly trust management reports detailing the status and value changes of trust assets, as well as valuation gains or losses. These reports shall be disclosed through the Electronic Public Disclosure System (DART) and over-the-counter exchange disclosure systems.
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