Korea’s securities regulator, the Financial Services Commission (FSA), has produced a set of measures which it says will enhance the efficiency of the market’s infrastructure and trading system.
Its intention is to “revitalise” the Korean stock market, which it says has been in a slump in recent years. The benchmark index KOSPI being stuck around the 2,000 point level since it hit that level in 2007.
The regulator said there is not enough supply of newly listed stocks to boost trading and the market’s infrastructure and trading system are not attractive to investors, compared to more advanced markets.
The FSC will boost stock market trading by allowing the listing of more blue-chip stocks, plus new derivatives products, such as mini futures and renminbi futures. It also wants to strengthen investor protection by improving disclosure rules applying to short selling positions.
In the enhancements to market infrastructure and the trading system, a new stock index, ‘KTOP 30’, will be introduced in the first half of 2015. It will comprise of the 30 best performing stocks on the KOSPI and KOSDAQ.
The FSC also plans to introduce the issuance and trading of electronic securities, which it said will reduce cost and enhance transparency in securities trading.
The Korea Exchange introduced a stabilising mechanism last September to counter sudden and temporary fluctuations in stock prices. In 2015, this will be strengthened, so that when individual stocks rise or fall by more than 10% from the previous day’s closing prices, trading will be converted into a single price auction for ten minutes.