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Electronic Short-term Bond issuance

The electronic short-term bonds system was adopted to develop the short-term financial market and lay the foundation for the introduction of electronic securities. Under this system, the issuance, circulation and rights exercise of short-term bonds, issued for short-term corporate financing, with maturities of one year or less, are processed electronically through an electronic registrar.

Account book structure of electronic short-term bonds

  • KSD registers and manages the details of issued electronic short-term bonds through the issuer account book, and the account manager's proprietary and client management account books.
  • To prevent recording errors, KSD performs daily reconciliation to check that the total amount of bonds in an issuer account book is equal to the total amount in the account managers' proprietary and client management account books.
Issuance, Circulation, Termination
Issuance Bonds are issued by registration in the account book without physical certificates.
  • The issuer notifies the registrar of the issuance details.
  • Bonds are issued once KSD and the account manager record the register and record the details in their respective account books.
  • Total amount of issued bonds → Issuer account book
  • Bonds underwritten by an account manager → Account manager's proprietary account book
  • Bonds purchased by clients → Client management account book (aggregate amount held by individual bondholders)
  • Client account book (holding details of individual bondholders)
Circulation Bonds are circulated through book-entry transfer.
  • Pledges and indications of trust are registered in the account book.
Termination The registration is cancelled after the redemption of principle and interest.

Electronic short-term bond issuance procedure

  • Issuers

    After negotiating the financing details with underwriters, the issuer confirms the details and notifies KSD.

  • Underwriters

    The underwriter checks the details notified by issuers, and pays the total purchase price through the BOK-Wire+.

  • Registrar

    The registrar checks the underwriter's payment, and at the same time, credits the electronic short-term bond into the registration account book.

  • Disclosure of information

    Information on the issued bonds is publicly disclosed through KSD's SEIBro in a real time basis.

Benefits of electronic short-term bonds

  • The risk of forgery, alteration and loss, as wells as costs arising from issuing physical commercial papers (CPs) are eliminated.
  • Issuance of ultra-short-term bonds is possible since it is subject to less time and space constraints compared to CP issuance.
  • Electronic short-term bonds can be traded in units of KRW 100 million, which contributes to the promotion of an active secondary market.
  • Investor protection is strengthened through the transparent disclosure of issuance information by the registrar.