Korea Exchange (KRX)

Definition

The Korea Exchange (KRX) is the sole securities exchange operator in South Korea. * It was created in 2005 through the merger of the Korea Stock Exchange (KSE), Korea Futures Exchange (KOFEX), and the KOSDAQ Stock Market. * It manages the trading of stocks, bonds, and derivatives, providing a centralized platform for the Korean capital market.

Key Market Divisions

• KOSPI Market: The main board for blue-chip companies like Samsung Electronics and SK Hynix. It represents the heavyweights of the Korean economy.
• KOSDAQ Market: The market for high-growth technology and small-to-medium enterprises (SMEs), similar to the U.S. Nasdaq.
• Derivatives Market: Offers trading for indices (KOSPI 200 Futures), currencies, and commodities. It is historically known for its high liquidity.

Primary Functions

• Listing Examination: KRX acts as the gatekeeper, rigorously reviewing companies that wish to go public (IPO) to ensure they meet financial and transparency standards.
• Market Surveillance: It monitors trading activities in real-time to detect and prevent unfair practices like insider trading or price manipulation.
• Index Calculation: It develops and calculates major indices such as the KOSPI 200, which serves as the underlying asset for futures and options.

Location & Status

• Although its operational hub is in Yeouido, Seoul (the Wall Street of Korea), its legal headquarters is located in Busan.
• It operates as a private company but performs public functions under the oversight of the Financial Services Commission (FSC).