Rules for Fund Management Eased
Korea Exchange announced on April 28 that it has decided to abolish the 30 percent market cap limit that has been applied to the KOSPI 200 and KRX300 indices. It explained that the measure is for fund management-related deregulation in the local capital market.
A revised enforcement ordinance of the Capital Markets Act became effective on April 1. According to the enforcement ordinance, an ETF following a major market index such as KOSPI 200 is allowed to contain a stock to the same extent as its ratio in the index. Previously, the ratio of a certain stock in an index was limited to 30 percent.
The market cap limit was introduced in June last year so that an abnormal dependence on a certain stock can be prevented. After the introduction, the limit drew much attention in relation to Samsung Electronics, which is substantially the only stock that is capable of reaching the limit.