After Confirming the Priority Dividend Amount and Then the Dividend Record Date
Abolition of Foreign Investor Registration System and Gradual Mandatory English Disclosure
[Asia Economy Reporter Hwang Yoon-joo] Sohn Byung-doo, Chairman of the Korea Exchange, said on the 31st, "We will improve the practice of 'dark dividend' by first confirming the dividend amount and then determining the dividend shareholders."
At a New Year's press conference held at the Korea Exchange building in Yeouido, Seoul, Chairman Sohn said, "We will overcome the undervaluation of the Korean stock market through improvements in dividend practices and the accessibility of foreign investors to the domestic market."
The improvement of the 'dark dividend' practice is also one of the capital market advancement measures announced by the Financial Services Commission on the 30th during the 2023 presidential briefing at the Yongsan Presidential Office in Seoul. Currently, domestic companies set the dividend record date first and then disclose the dividend amount. As a result, dividend shareholders are determined before the dividend amount is confirmed, limiting investment decision opportunities and leading to criticism that domestic companies have a low dividend payout ratio.
Chairman Sohn also revealed measures to improve foreign investors' accessibility to the domestic market. Representative measures include abolishing the foreign investor registration system, mandating English disclosures for listed companies, and advancing the opening time of derivative markets. He stated, "We will abolish the foreign investor registration system and allow investments using the 'LEI (Legal Entity Identifier)' system for corporations and passport numbers for individuals." He also added, "KOSPI-listed companies with assets over 10 trillion won will be required to disclose in English by 2024, and those with assets over 2 trillion won will be gradually required to disclose in English by 2026." Furthermore, the scope of OTC trading allowed for foreigners will be significantly expanded. In the derivatives market, the opening time will be moved forward by 15 minutes from 9:00 to 8:45.
Chairman Sohn emphasized that strict measures will continue to be taken against unfair practices this year. To this end, the process of detecting naked short selling allegations will be shortened, and the scope of inspections will be expanded. He said, "We will thoroughly eradicate unfair trading by shortening the detection period for naked short selling allegations, timely responding to social issues, and establishing processes to restrict market participation by unfair traders."
The current naked short selling inspection process takes more than a week: suspicious accounts are identified (Exchange) → lending information requested (Exchange) → lending information provided (investor) → determination of naked short selling (Exchange). They are considering shortening this to within two days by changing the process to lending information provided (investor) → determination of naked short selling (Exchange).
Last July, when a major controversy arose over illegal short selling activities by securities firms, President Yoon Suk-yeol instructed, "Financial authorities and related agencies such as the prosecution must establish related measures with the determination to completely eradicate illegal activities surrounding short selling." In response, the Supreme Prosecutors' Office, Financial Supervisory Service, Korea Exchange, and other related agencies held joint meetings to prepare countermeasures.
Unfair trading sanctions will also be strengthened. Investors who engage in malicious and repeated unfair trading will face restrictions on opening new accounts and trading financial investment products for up to 10 years.
Regarding the launch of Alternative Trading Systems (ATS), Chairman Sohn stated that the competitiveness of the Korea Exchange will be strengthened. He emphasized, "In preparation for ATS competition, we will enhance the competitiveness of trading systems and infrastructure services, and open a digital securities market where security-type digital assets can be listed and traded."
Meanwhile, the Korea Exchange has declared four major missions for this year: Premium Market, Dynamic Market, Trusted Market, and Efficient Market.
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