Korea Exchange (KRX) plans to simplify the listing system of the KOSDAQ market by focusing on the future value of the applicants, such as market capitalization. KRX will also introduce a management system for algorithmic trading.
KRX Chairman Jung Ji-won disclosed the exchange’s business plan for next year during a news conference in Yeoido, Seoul on Dec. 10.
“We will reform the listing requirements of the KOSDAQ market by shifting the focus to future growth potential,” Jung said, adding, "I think market capitalization can intuitively reflect a company’s future growth value." He went on to say, "We consider market cap an important factor, but have not made any decision yet."
Currently, KOSDAQ market entry tracks are divided into 11 types -- four tracks for general companies, five tracks for companies with unrealized income and two tracks for technology-powered companies. They assess companies’ profits, paid-in capital, sales, and market cap among others.
Chung said that KRX will define more specifically the concept of algorithmic trading as it has caused controversy over unfair trading. It will also introduce a risk management system.
Earlier in July, the exchange imposed a fine on global investment bank Merrill Lynch for allegedly processing a large number of fake orders through algorithmic trading.
Korea Exchange will provide English language services about companies whose stocks are popular among foreign investors. It will also actively promote an environmental, social responsibility and governance (ESG) information disclosure project. In particular, for the disclosure of ESG information, it plans to establish an ESG committee composed of external experts and prepare guidelines on information disclosure.
In addition, it will make a decision on the listing of derivatives including equity-linked securities (ELS) and derivatives-linked securities (DLS) on the exchange as listing of these derivatives products has emerged as an alternative measure to prevent the recurrence of the recent DLF fiasco.