Korean government and fund-industry officials are set to launch an industry-owned online funds supermarket in January 2014, according to the Korea Financial Investment Association (Kofia) and company executives.

In late June, 24 organisations agreed to finance the utility, which for now is being supervised by a 10-person committee of industry executives under the aegis of Kofia.

Cho Yong-byung, CEO of Shinhan BNP Paribas Asset Management, was named chairman of the committee. He declined requests to speak to AsianInvestor at this time, while Kim Cheol-bae, the relevant managing director at Kofia, declined to comment, referring queries to the committee.

However a number of industry executives have said the initiative is designed to break the grip of distributors – banks and securities houses – on the sale of funds. Another goal of the government is to bring down fees.

Around 85% of sales of investment funds in Korea are by the biggest 10 asset management companies – all of which are affiliates of banks or securities firms, which distribute these products.

There are 84 licensed fund management companies and about half of those outside the top 10 are unprofitable, according to industry figures.

The Financial Supervisory Service has led the initiative to promote an industry-owned online funds supermarket, with Kofia mandated to lead the initiative. Kofia, with the advice of Deloittes, called for an initial seeding of W20billion ($17 million). Fund managers have been asked to stump up, with the biggest 10 investing W1 billion each, and lesser amounts from smaller firms based on assets under management.

Four fund ratings firms, including Morningstar as well as local providers Zeroin, KBP Fund Rating and FNGuide, have also put up cash. They will be expected to provide content for the supermarket, although those details – like many others – have yet to be finalised.

The oversight committee’s members include senior executives from Fidelity and Schroders, as well as from Zeroin, Kofia, and local fund houses KB Asset Management, Korea Investment Management, KTB Asset Management, Truston and Kiwoom.

“The inclusion of Fidelity is significant,” says an executive at a competing foreign-owned asset manager. “They have their own internet-based sales platform in other countries and can bring a lot of experience.”

The next key step, however, is to foster to the independent financial analyst (IFA) community that can make use of the supermarket. Kofia has submitted an outline to the regulators about how to licence such operators, and is operating on a timeline that would see licences handed out by the end of the year, according to fund executives.

Earlier this year, Kofia sent out an RFP to global consultants seeking help in constructing the online supermarket.