• 07 / 02 / 2015
  • Plan to Strengthen Competitiveness of Korea's Exchange Markets

  • Plan to Strengthen Competitiveness of Korea's Exchange Markets
    FSC Chairman Yim Jong-yong
    July 2, 2015
    Let me brief you on the FSC's plan discussed and approved at the Financial Reform Council this morning
    to make Korea's exchange more competitive.
    Vitalizing Korea's capital markets is a key financial reform agenda.
    The KRX is the most important infrastructure for Korea's capital markets.
    To further develop Korea's capital markets and support economic growth,
    it is necessary to boost competitiveness of the exchange.
    However, there are still many structural obstables that prevent further growth of the KRX.
    For example, there are thousands of domestic companies that have already met listing requirements,
    but due to lack of efforts to attract listings of such companies,
    the number of listings to the domestic exchange is only 40 a year.
    The world's exchanges are competing with each other to list global blue-chip companies,
    prodive a variety of products and better services for investors.
    The KRX has been falling behind such global trend, still unable to escape from the domestic markets.
    Korea's leading online game developer, Nexon, chose Japan's stock exchange for listing, not the KRX.
    It is a case in point that shows possible outcomes we would have to face
    if the KRX were way behind global exchanges in fierce competition.
    Against the backdrop, the plan is intended to support the KRX to reinvent itself into
    one of leading innovative exchanges in the region.
    With the plan, the government aims to achieve two major goals.
    First, we aim to raise the level of Korea's capital markets
    by strengthening competitiveness of the Korean exchange market.
    Inefficiency aused by the monopolistic status of the KRX needs to be eliminated.
    The KRX will be reinvented into an innovative services provider
    to compete with global leading exchanges,
    which will eventually boost competitivenss and vitality of Korea's capital markets as a whole.
    Our second goal is to strengthen the roles of KOSDAQ and KONEX markets.
    By doing so, venture capital will be channeled to entrepreneurs with innovative technology and ideas to establish startups.
    In the growth phase, such startups will be financed by the Growth Ladder Fund PEFs.
    At the mature stage, such entrepreneurship will be rewarded through KONEX and KOSDAQ markets.
    That's the way Korea's capital markets should go.
    So far, partial improvements have been made and related policy measures have been taken
    to strengthen the function of KOSDAQ market, and we have achieved some progress.
    However, if KOSDAQ doesen't change, we believe that it will always stay as a secondary market within the KRX.
    This time's reform focuses on separating the KOSDAQ market and establishing an autonomous corporate body with independance.
    Moreover, we will redefine KOSDAQ's identity as a market necessary for high-tech firms and venture companies to finance fund.
    At the same time, we will create a virtuous cycle of 'investment-divestment-reinvestment' centered by KOSDAQ market.
    The government plans to strengthen competitiveness of Korea's exchanges according to 4 main directions.
    First of all, we will reorganize the KRX into a holdings company to increase management efficiency
    and promote competition among exchanges to improve quality of products and services.
    Second, by strengthening competitiveness of KOSDAQ and KONEX markets,
    we will develop a new main board for all SMEs and tech firms.
    Upon establishing the KRX holding company, we will ensure its management autonomy through IPO
    and strengthen global competitiveness.
    Moreover, we will secure investment to further strengthen the KOSDAQ market's competitiveness.
    Lastly, by adding other competitors outside the KRX such as ATS
    we will diversify the capital markets structure which is currently centered by the KRX.
    Today's plan to strengthen competitiveness of Korea's exchanges is expected to bring mega changes in our capital markets.
    Our reform this time is a fundamental effort to reform financial infrastructure to realize Creative Economy
    which will become an important turning point for us to create a financial ecosystem
    for high tech firms and innovative venture companies to successfully raise necessary funds.
    Separating and strengthening the function of KOSDAQ market will create a level playing ground for it to compete with KOSPI market.
    Moreover, if more promising companies are listed in KOSDAQ market,
    more number of firms will be able to easily finance money needed for growth.
    Eventually, it will motivate more potential entrepreneurs to found a company based on creative ideas
    which will contribute in realizing Creative Economy.
    Competitiveness of the KRX will be significantly strengthened as well.
    From a monopolistic supplier, the KRX will transform into a consumer-oriented and market-friendly service provider
    and provide better services to corporates and investors.
    Furthermore, the KRX will no longer focus on small regional markets.
    Rather, it will become a global player which will strengthen global competitiveness of Korea's capital markets
    and investors will have more options for investment.
    Moreover, regarding product development, listing, and market management,
    more autonomy and responsibility will be granted to the KRX.
    By doing so, the KRX will transform into a creative and innovative organization.
    And we will provide all necessary assistances.
    Such changes in the KRX will benefit investors as well.
    Investors will not only be able to trade various foreign products easily and choose more profitable trading platform,
    but they will also have more variety of investment opportunities in countless promising companies.
    The government will do our best to realize the ultimate goal.
    Above all, we will try to pass the revised FSCMA
    to establish the KRX holdings within this year's regular session of the National Assembly.
    When the revised bill is approved, we will establish the KRX holdings
    and make sure the company goes public at the earliest possible future.
    We will put our utmost efforts to realize our goal as soon as possible.
    Thank you very much for listening.

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