About the Korean Stock Market

South Korea's modern stock market was created in 2005 when the nation's four markets merged into a single entity. The Korean stock market is located in Yeouido, an island adjacent to Seoul, off the Yeouido Line 5 subway station. For Western and Asian investors interested in South Korea, the market is growing into an international power due to its proximity to China and Japan. In order to understand the vagaries of the Korean stock market, an investor should know about its parent group, the Korean Exchange, as well as the market's brief history.

History

South Korea's first stock market was created in 1956, only three years after the ceasefire ending the Korean War. The first year of the stock market featured 12 domestic companies dealing in government bonds. In the 1970s, the South Korean government introduced the Korean Securities Depository (1974) and the Korean Securities Computer Corporation (1977) to streamline trading and end-of-day reconciliation. The Korean stock market was closed to foreign investors until 1992 when a limited number of major international firms were allowed to trade in Seoul. The exchange has increased in importance since 1997 as limitations on foreign companies listed on the market were lifted.

Organization

The Korean stock market is one of several divisions of the Korean Exchange, a financial corporation in charge of the country's domestic and international trade. The Korean Exchange oversees the Stock Market, Futures and Management Strategy Divisions through its board of directors and chairman. The stock market's daily organization has gone from manual trading in the early 1980s to automated orders in 1983 and a fully automated trading platform in 1997.

Proposed Improvements

While the Korean stock market has advanced drastically over the last decade, the Korean Exchange has stated several goals to improve trade security and speed. The surveillance system currently used by the Exchange to monitor online trading will be beefed up to prevent illegal trading by domestic and international investors. The Korean Exchange also wants domestic companies to be listed on a greater number of foreign exchanges. The stock market may soon be listing exchange prices from around the world in an effort at greater relations between international financial institutions.

Maintaining Fair Trade Practices

The Korean Exchange goes to great lengths to ensure that the stock market and futures market are offering investment opportunities that are fair to investors. The stock market's listings are shorter than major markets in North America and Europe in an effort to cut back on penny stocks and other risky investments. South Korea has also instituted regulations requiring the publication of corporate disclosures on the Internet, allowing investors all over the world to find out about corporate problems before buying shares.

Strategic Goals of the Korean Stock Market

The Korean Exchange uses five strategic goals to manage the Korean stock market. These goals including the desire to increase the market's growth, promoting international competition, fighting financial uncertainty, meeting the needs of customers and implementing creative solutions to market problems. The Korean stock market's goals are lumped under a larger program called Global KRX(2015). The Korean Exchange wants to set itself apart from other global markets in the next six years by working with foreign exchanges, increasing the efficiency of trading on the market and encouraging a more flexible economic culture in South Korea.

Resources

• The Korean Exchange