Delisting of stocks is dangerous. What are the requirements for delisting stocks? The most representative case is that the company’s performance is so bad that it can’t continue. If it is a listed company on the KOSPI market, if capital erosion, whose sales have shrunk excessively to less than 5 billion won or a deficit that has eroded its capital, the money it put in when it first created the company, continues for two consecutive years, it will be a requirement for delisting. In addition, the company will be delisted if it fails to submit a business report or goes bankrupt.
When the delisting of stocks is decided, it gives investors a period of clearance and trading to get out. This is the last chance to trade stocks on the market. There will be clearance sales for 7 days based on the trading day. The problem is that the stock price limit disappears during this period. It can go up or down by more than 30 percent a day. Because of this, stock prices often move up and down.
Then when will ETF be delisted. The Korea Exchange sets various delisting requirements, but most small ETFs are subject to delisting. A typical case is that ETF, which has been listed for more than a year, has maintained its net asset value below 5 billion won for more than a month, or there is no liquidity provider (LP) that has to pay the ETF price. If it is a passive ETF, the correlation coefficient, which means how similar the index is to the ETF, is 0.9, and if it is an active ETF, the correlation coefficient must be maintained at 0.7 or higher to avoid delisting.
The reason why the delisting of ETF is not 비대면폰테크 dangerous unlike stocks can be found here. Individual stocks are usually delisted when there is a problem with the business contents of the invested company. However, apart from the companies invested, ETF is usually delisted when ETF is small and transactions are not active. Since companies invested by ETF maintain their value while trading on the market, even if the delisting of ETF is decided, the value of ETF will not be affected. Not stocks, but raw materials like gold and silver, bonds, and so on. Investors can sell according to the value of ETF’s assets before delisting.
Even if the asset management company that operates the ETF extremely fails, investors can get their investments back as much as the value of the ETF. This is because the assets invested by ETF are not held by asset managers, but by banks that are independent trustees
But if it’s synthetic ETF, there can be some risks. If a securities firm, not an operator, fails and ETF is delisted, it could lose a little. To tell you this, we need to know the structure of synthetic ETF first. Synthetic ETF is a contract with a securities company, not an asset management company directly operating ETF. For example, if it is a synthetic ETF that follows the KOSDAQ index, a manager does not buy shares included in the KOSDAQ index and operate the ETF, but sign a contract with a securities firm to make as much profit as the KOSDAQ index.