KOFIA toughens rules for IPO institutional bidders

[Photo by Yonhap]

South Korea will toughen the guidelines in institutional bidding for Korean initial public offerings to prevent expedient and irregular activities amid IPO frenzy.

According to multiple sources from the financial investment industry on Monday, the Korea Financial Investment Association (KOFIA) has recently notified an amendment on investment bank business, enabling discretionary investment business past two years in business registration and with more than 5 billion won ($4.2 million) in trusted funds to participate in book building sessions.

The move is to curb insincere bids and suspicious design in taking part in the book-building sessions.

KOFIA will also ban brokerages from lending the initial shares under lockup or using them as substitute securities. KOFIA will slap penalty on delinquent institutional bidders.

The amendment will be enforced from February 25 while enhanced requirement to participate in book building sessions will be applied to securities reports submitted after April 1.

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