[Exclusive] Korea Exchange Union to Rally in Front of Blue House Against KOSDAQ Spin-Off

Exchange Union: "KOSDAQ Spin-Off Will Inevitably Weaken Market Quality"

About ten condolence wreaths have been placed on the first floor of the Korea Exchange in Yeouido, Seoul. Reporter Lim Chunhan

The government and the ruling party are pushing to convert the Korea Exchange (KRX) into a holding company structure and to spin off the KOSDAQ market as a separate subsidiary, drawing strong backlash from the Korea Exchange labor union.

According to the industry on the 23rd, the Korea Exchange branch of the National Office & Financial Service Workers' Union plans to hold a general assembly of about 300 union members in front of the Blue House on March 4. They plan to deliver a strong message of opposition, saying that "(the KOSDAQ spin-off) is a ridiculous idea born out of ignorance about market structure." They also plan to distribute policy proposal materials to members of the National Assembly's Political Affairs Committee.

The Korea Exchange labor union directly refuted the argument for "turning KOSDAQ into another Nasdaq." A union official said, "KOSDAQ is a single market, whereas Nasdaq is an exchange that operates multiple markets, so it is wrong from the outset to compare them on the same line," adding, "This is no different from comparing a neighborhood-level district with an entire metropolitan city, or trying to make middle school students compete with university students."

The official continued, "Major global exchanges such as Nasdaq in the United States and JPX in Japan are instead moving toward integrating multiple markets within a single exchange," and stressed, "Maintaining a growth-ladder system in which companies move from lower-tier markets to upper-tier markets in line with their growth stage is the global standard."

The union warned that if KOSDAQ is spun off as a separate subsidiary and forced to compete with KOSPI, it will lead to a deterioration in market quality. It argued that if the market becomes fixated on profit-driven competition, a large number of poorly prepared and weak companies will flood into the market, which could result in a repeat of the "dot-com bubble" experienced in 1999, ultimately leaving retail investors to bear the full brunt of the damage.

Opposition has also emerged in Busan, where the exchange's head office is currently located. On the 12th, Busan Mayor Park Heongjoon wrote on Facebook, "This is tantamount to abandoning the successive governments' policies to make Busan a financial hub," adding, "We cannot accept the KOSDAQ spin-off, but even more problematic is the conversion of KRX into a holding company. Without clear rules on the location of the head office, its core functions could move to the Seoul metropolitan area, reducing Busan's financial status to an empty shell."

The Busan Citizens' Coalition for Economic Justice issued a statement on the 11th, calling the move "a measure that undermines the status of Busan as a financial hub," and declared, "If the government ignores the voices of the regions and pushes ahead with a Seoul-centered policy of financial monopoly, we will respond forcefully by mobilizing every possible means."