(LEAD) Korea Exchange pushes for holding firm, eyes IPO

(ATTN: CHANGES headline; RESTRUCTURES throughout with more details, comments)
By Kim Eun-jung

SEOUL, July 2 (Yonhap) -- South Korea's bourse operator said Thursday it will overhaul its centralized operation system via a holding firm structure and go public to boost its competitiveness and aggressively go abroad.

The Korea Exchange (KRX) had been eyeing the initial public offering (IPO), but the plan has taken shape after the government in January delisted it as a public institution in response to growing calls to reform its structure and improve global competitiveness.

The KRX was launched in 2005 by consolidating the main board KOSPI, tech-heavy KOSDAQ and the derivative market, but it came under the government control in 2009 because of its dominant influence in the market.

According to the plan, which needs approval from financial regulators and the parliament, a holding company will oversee three subsidiaries in charge of the main stock exchange, the secondary bourse for small- and mid- sized firms, and the derivative market for futures and options.

The latest move came as heavy reliance on commission fees and high barriers for listing have been accused of hindering development of the equity market in Asia's fourth-largest economy, which has lagged behind its global peers.

"The holdings firm will focus on business management, while subsidiaries will operate independent businesses," KRX Chairman Choi Kyung-soo said in a briefing. "We will also streamline the structure to remove overlapping roles between the holding firm and affiliates to cut costs and improve efficiency."

The KRX is expected to set up the holding firm as early as next year, and push forward the public offering once the previous process is completed.

The much-awaited IPO plan has drawn keen attention from local institutions in the hopes that the listing would boost their market value.

The KRX is owned by about 40 local brokerage houses and futures firms, with each of their holdings not exceeding the 5 percent limit under current laws.

Foreign investors have also shown interest in the KRX stake sale in the hope that it may become the potential winner when it goes public. Stocks of the Tokyo Stock Exchange and Osaka Securities Exchange, which were merged and went public in January 2013, surged as much as 3.8 times a year later.

The KRX said it will use funds raised from the IPO to push for merger and acquisitions and joint ventures.

It also pledged to step up collaboration with global exchanges to jointly develop financial instruments and expand cross-border programs, including a yuan-won currency exchange market.

For that goal, the Financial Services Commission (FSC) said it will submit a revision bill to the parliament in September to pass within this year.

"The holdings firm structure will curb inefficiency stemming from the sole stock exchange's dominant role in the market," FSC Chairman Yim Jong-yong said in a briefing. "We will also foster KOSDAQ as another main board that includes not only venture firms and small- and medium- enterprises but also companies with advanced technologies and growth potential."

A series of deregulatory measures have been introduced to support President Park Geun-hye's "creative economy" initiative, which is designed to foster new economic drivers beyond the nation's traditional manufacturing and heavy industries.

The FSC also said it will ease regulations to facilitate investment in start-up companies and give wider options to venture capitalists to generate returns so they can plow back the profits to other entrepreneurs.

ejkim@yna.co.kr
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