South Korea Introduces Cornerstone Investor System to Stabilize IPOs

The Financial Services Commission of South Korea will introduce a cornerstone investor system for initial public offerings starting November 13, 2026. The regulator designed the system to curb the volatility seen in 2026, a year where listings fell by a weighted-average of 32% despite a 38% gain in the Kospi index.

Under the new rules, institutional investors can receive share allocations in advance if they commit to lockup periods of at least six months. To prevent a sudden rush of selling, the commission will release shares in stages: 50% after six months, 30% after eight months, and 20% after ten months. To qualify for the system, investors must hold equity capital or assets under management at least 20 times the value of their subscription.

Additionally, the commission is allowing underwriters to gauge institutional demand under non-disclosure agreements before a company files its registration statement. The regulator stated that lining up stable, longer-term institutional buyers before a deal is priced should bolster investor confidence and ease the problem of shares tumbling immediately after listing.