Samsung Securities becomes 8th short-term financing licensee as FSC approves

Samsung Securities is entering the promissory note market after receiving short-term financing business approval from financial regulators. With cash sitting on the sidelines in the stock market shrinking rapidly, the number of promissory note issuers has grown to eight, intensifying competition among brokerages to attract customer funds.

The Financial Services Commission said it held its 15th regular meeting Wednesday, presided over by FSC Chairman Lee Eok-won, and deliberated and approved a short-term financing business license for Samsung Securities under Article 360 of the Financial Investment Services and Capital Markets Act. Samsung Securities plans to begin issuing promissory notes based on the new license.

Promissory notes are financial products with maturities of up to one year that brokerages issue based on their own creditworthiness. Because they allow firms to raise funds of up to 200 percent of their equity capital, brokerages use them as a funding tool to expand into investment banking and other businesses.

The latest approval brings the total number of comprehensive financial investment firms allowed to run a short-term financing business to eight. Mirae Asset Securities, Korea Investment & Securities, NH Investment and KB Securities were the original four, joined last year by Kiwoom Securities, Shinhan Investment and Hana Securities. Samsung Securities is the latest to join the group.

Samsung Securities' entry comes as cash sitting on the sidelines in the stock market continues to shrink. According to the Korea Financial Investment Association, investor deposits stood at 96.99 trillion won ($72.3 billion) as of Tuesday. That was down about 40 trillion won from 136.83 trillion won on June 23. The figure fell as low as 93.55 trillion won on Friday, the lowest level in about eight months, since early this year. As stock market volatility rises and banks raise deposit and savings rates, brokerages are also competing to hold onto customer funds.

Promissory note rates have also climbed back above 4 percent. Korea Investment & Securities recently raised the rate on its one-year won-denominated promissory notes to 4.00 percent from 3.85 percent, while Kiwoom Securities and Hana Securities are also offering 4.00 percent on one-year notes. Promissory note rates, which had fallen into the 3 percent range since 2024 amid interest rate cuts, are climbing again.

The FSC expects Samsung Securities' new license to boost the supply of venture capital. "We expect it to respond to companies' diverse funding needs, including the supply of venture capital," an FSC official said, referring to Samsung Securities.