The presidential office is directly pushing "exchange holding company conversion," and the debate is rapidly gaining momentum. However, because the exchange is a private company, even if legislation is completed, it must clear the high bars of winning shareholder approval and persuading internal members.
"Exchange holding company conversion" is a system that converts the Korea Exchange (KRX) into a holding company and separates each market, such as KOSPI and KOSDAQ, into subsidiaries dedicated to those markets.
Following President Lee Jae-myung's directive to reform the Korea Exchange (KRX), Presidential Chief of Staff for Policy Kim Yong-beom also floated the "exchange holding company conversion" card. While vowing a structure on a different level from the past, Democratic Party of Korea lawmaker Kim Tae-nyeon on the 6th proposed an amendment to the Financial Investment Services and Capital Markets Act that tightens listing requirements, stepping in to support legislation.
The amendment to the Financial Investment Services and Capital Markets Act, centered on content related to exchange holding company conversion, is similar to the plan drafted in 2015 when the conversion was first pursued, but it adds provisions on preventing dual listings and swiftly delisting distressed companies. The reason the government and ruling party are moving at this pace for the first time in 11 years is ultimately to fundamentally improve the KOSDAQ market's structure.
A National Assembly official said, "Until now, the exchange has managed both the main board and the KOSDAQ market, so when a policy direction tailored to the KOSPI market was designed, parts of it were applied to the KOSDAQ market as well," adding, "If KOSPI and KOSDAQ are separated into subsidiaries under a holding company structure, policy directions tailored to each market can be designed."
Even if it clears the National Assembly, its status as a private company could pose a stumbling block. As a stock company, the exchange needs to win support from shareholders in the financial investment industry, and it must also resolve the longstanding task of reaching agreement with internal members.
A senior exchange official said, "If the conversion to a holding company takes place, employees who belonged to the exchange will have their affiliation changed to subsidiaries," adding, "Consent from the employees themselves and the labor union is necessary."
In the past, when the holding company discussion surfaced, there was even a dispute over the location of the exchange's headquarters. Under the current Financial Investment Services and Capital Markets Act, the exchange's headquarters is designated as Busan. The derivatives market division and the clearing and settlement division are located in Busan. However, in 2015, a political dispute erupted over the provision requiring the headquarters be in Busan, with calls to delete it, and the holding company discussion eventually fizzled out.
However, because the presidential office is strongly taking the lead directly, there is a possibility of rapid progress. Exchange Chairperson Jeong Eun-bo also said at a New Year's press briefing held the day before (on the 5th) regarding this, "We will work with the policy authorities and the National Assembly to develop an exchange restructuring plan."