KRX Chief Attends Malaysian Forum

CEO Lee joins the likes of finance ministers, world-renowned scholars to discuss various financial issues in Kuala Lumpur

President Lee Jung-hwan of the Korea Exchange attended the World Capital Market Symposium held Aug. 10-11 in Kuala Lumpur, Malaysia, sponsored by the Malaysian Securities Commission.
At the symposium, leaders of global capital market and economic organizations discussed such key international issues as the current trends in world capital markets and their prospects.
KRX President Lee participated in a panel discussion on the theme of “The Search for the New Alpha,” which took up such issues as new investment trends following the financial crisis, the role of the stock exchanges and business opportunities, the Korea Exchange said.
Among the participants were Malaysian Prime Minister Najib Tun Abdul Razak, finance ministers from Singapore, Thailand, Malaysia, New Zealand, the Netherlands, India, and Jordan. Other prominent participants included economic advisor to U.S. President Barak Obama Professor Laura Tyson, Nobel Prize winning professor Paul Krugman and Chairman Craig Donohue of the Chicago Mercantile Exchange, among others.
Following the symposium, President Lee visited the Bourse Malaysia and discussed the export of IT systems to Malaysia with BM CEO Yusli Mohammed Yusof.
In the meantime, President Lee signed a joint venture agreement with the Laotian Central Bank headed by President Phouphet Kamphounvong on July 22 in Vientiane to help set up a stock exchange in Laos.
The Korean Stock Market opened in 1956 with 12 listed companies. During its early years, the Korean Stock Market was more of a government bond market, and the level of stock trading was insignificant. It also experienced a series of market crashes, resulting in the market’s closing and the reorganization of its Stock Market Division. Since the mid 1960s, however, the Korean Stock Market grew rapidly, owing to a series of government actions aimed to develop a capital market that could support national economic development plans, and to encourage privately-owned companies to go public. Examples of the important legislations enacted for these purposes are the Securities and Exchange Act of 1962, the law on Fostering the Capital Market of 1968 and the Public Corporation Inducement Act of 1973.
In order to effectively manage a rapidly growing market, the stock exchange made concerted efforts to improve its trading systems and build market infrastructure. It introduced the regular-way transaction in 1969 and continuous trading in 1975. The order-routing system was automated in 1983, thus enabling member firms to electronically transmit orders to the trading floor for an efficient system, beginning from 1988. The trading system was fully automated in 1997 and the exchange began to operate its market without the trading floor.
For efficient trade settlement, the Korea Securities Depository (KSD) was established in 1974, followed by the Korea Securities Computer Corporation (KOSCOM) in 1977 to facilitate the computerization of the securities industry. With the growing business, physical expansion was necessary and the exchange was moved to its present location on Yeouido, thus creating a Korean version of “Wall Street.”
Since the early 1980s, the Korean stock market was gradually opened to foreign investors. As the first step, international investment trusts and country funds such as the Korea Fund were launched, thus allowing foreigners to make indirect portfolio investments. In 1992, the Korean stock market was opened to foreign investors with certain restrictions, and the foreign share ownership restrictions were gradually lifted and were fully eliminated in 1998. Additionally, membership in the Korean Market was opened to foreign securities companies.
The Stock Market Division took various measures to ensure the establishment of fair market prices and the protection of investors. For instance, by listing stocks of corporations with their growth potential, credibility and profitability, investor risks were minimized and corporate disclosures, which provide information necessary for investment decisions, were made available through the electronic disclosure system accessible by investors, both in Korea and elsewhere, via the Internet. To build a reliable and transparent market, the Stock Market Division monitors stocks price movements and investigates abnormal trading through the updated consolidated surveillance system. The Stock Market Division also has taken up a leading role in improving corporate governance practices in Korea. nw

President Lee Jung-hwan of Korea Exchange, left, holds an MOU with President Phouphet Kamphounvong of the Laotian Central Bank to jointly set up a stock exchange in Vientiane, Laos, on July 22.