If the investor requests the creation of the Fund with paid-in assets that do not represent the Portfolio Deposit File, the Authorized Participant can sell or purchase securities so as to bring the paid-in assets in conformity with the Portfolio Deposit File and then request the asset manager to create the Fund. In such case, the investor will delegate decision making relating to the sale and purchase of the paid-in assets (e.g., the timing, price, and volume of sale and purchase of securities, etc.) to the Authorized Participant and and the investor enjoys all profits and bears all losses arising from the sale and purchase of the paid-in assets.
The Authorized Participant enters all creation requests of a given day into the system of the Korea Securities Depository, and the creation request come into effect upon the asset manager’s approval.
First Business Day from the Creation Request Date (T+1)
The entities related to the management of the Fund i.e., the asset manager, the Authorized Participant and the Korea Securities Depository will, based on all creation requests of the day, prepare a statement of the assets to be settled on the second business day (T+2) following the creation request date and notify it to the investors who requested the creation of the Fund, so that settlement can occur on the second business day following the creation request date.
The asset manager will, based on the settlement statement determined on that day, apply to the Korea Securities Depository for additional listing.
Second Business Day from the Creation Request Date (T+2)
The Authorized Participant and the Trustee will deliver and receive the paid-in assets through the Korea Securities Depository, and the asset manager will issue and deposit with the Korea Securities Depository all of the shares.
The Authorized Participant who receives the issued shares will transfer the shares to the investor’s account who requested the creation of the Fund, and the investor can, immediately upon such transfer, trade (sell) the shares on the Korea Exchange.
Notwithstanding the above provisions, some Authorized Participant may transfer the shares to the investor’s account at start of business of Korea Exchange on day T+2 for the sake of convenience of the investors, so investors are advised to check in advance.
Summary of Procedure for Creation of the Fund
T-1 T T+1 Request for creation of the Fund to the Authorized Participants