South Korea’s sole stock market, Korea Exchange, is set to become a listed holding company that will foster more competition between its boards under government reforms aimed at better attracting firms seeking to go public.
Under the planned revamp, the holding company will have different subsidiaries that will house main board KOSPI, the tech-heavy KOSDAQ and its derivatives market separately, the country’s Financial Services Commission said in a statement.
Its proposals will be submitted to parliament later this year.
The commission criticised the current bourse structure as a monopoly with listing rules that are too rigid and too focused on profits. The KOSDAQ has failed to actively court new listings and as a result companies like online gaming firm Nexon Co Ltd have gone public overseas, it added.
Around 600 companies qualify to list on the KOSPI and 9,000 qualify for the KOSDAQ market, but together the boards average just 40 listings per year, it said.
The new holding company would be floated at some point in the future, the commission said without setting a planned date, adding that it hoped the reforms would be a prelude to the exchange expanding its global reach.
Currently, nearly 40 brokerages divide ownership of the exchange by holding minority stakes, which has led it to behave like a non-profit public institution, the commission said.
There were 114 new listings on Korea Exchange’s markets between 2012-2014, compared to 411 on the Nasdaq and 272 for Hong Kong Exchanges and Clearing Ltd.