Congress has approved the introduction of the "cornerstone investor system" to guide long-term investments.

With the passage of the Capital Market Act amendment introducing the cornerstone investor system by Congress, the domestic initial public offering (IPO) market has ushered in an opportunity to shift from short-term arbitrage to long-term investment.

The Korea Financial Investment Association welcomed the passage of this bill on April 23, 2026. The cornerstone investor system refers to the pre-allocation of a portion of new shares to institutional investors who commit to holding the shares for a certain period before listing. In simple terms, it is a mechanism that supports enterprises in ensuring long-term investors from an institutional perspective before going public.

This system has attracted attention because recent IPO markets have repeatedly experienced uncertainty in new share pricing and sharp post-listing stock price fluctuations. During demand forecasting, if a large influx of funds aimed at short-term trading enters, the discrepancy between the offering price and the company’s actual value may increase, and the stock price on the first day of listing could experience significant volatility. The purpose of this amendment is to address these issues by guiding the formation of more stable and reasonable prices based on pre-investment agreements with professional investors.

The Korea Financial Investment Association particularly emphasized the importance of at least a six-month lock-up obligation. Lock-up refers to a system that prohibits the sale of shares within a certain period. This system can prevent a large volume of sell orders from flooding the market immediately after listing. For promising companies, it ensures high-quality long-term investors before going public, thereby increasing the predictability of financing; for ordinary investors, it offers the expectation of a market environment with reduced volatility during the initial listing period.

Hwang Sung-yeol, president of the Korea Financial Investment Association, commented that this system will help establish reasonable new share issuance prices and serve as a turning point to improve the structure of the domestic IPO market. Some market analysts also believe that this legislation is a move to formally introduce advanced IPO practices from major overseas markets into the domestic system. This trend is expected to enhance the credibility of the IPO market in the future, provide more stable funding for corporate development, and broaden medium- and long-term return opportunities for investors.