Korea Exchange: All About It
KRX
Korea Exchange (KRX) is a world class exchange and the sole securities exchange operator in South Korea dealing in globally competitive sectors such as information and communications, semiconductors, displays, building, automobiles, steel and petrochemicals.
It is headquartered in Busan and has an office for cash markets and market oversight in Seoul. The Korea Exchange was created through the integration of Korea Stock Exchange, Korea Futures Exchange and KOSDAQ Stock Market under the Korea Stock & Futures Exchange Act. This merger gave rise to a new stock exchange with more than 1,800 listed companies with a combined market capitalisation of $1.1 trillion making it one of the largest exchanges in Asia. The securities and derivatives markets of former exchanges are now business divisions of Korea Exchange: the Stock Market Division, KOSDAQ Market Division and Derivatives Market Division.
The Korea Exchange only originated very recently in 2005 although the three component units have been in operation for many years. The Stock Market Division started operating in 1956 and operated as the sole stock exchange in Korea until 1996 when the Stock Index Futures Market was launched. Prior to this development, electronic trading was introduced in 1988. The Stock Index Options Market commenced operations in 1997 and subsequently, the portfolio of trading instruments was increased at the turn of the century to include warrant trading, equity options and exchange traded funds (ETFs).
The former three individual exchanges now constitute departments of the new Korea Exchange, each specifically indicating the securities traded on the Korea Exchange. Stocks, bonds, exchange traded funds (ETFs) and Real Estate Investment Trusts are traded at the Stock Market Division (KOSPI) and functioning much the same way as the NASDAQ. The Derivatives Division is where other securities such as the stock indexes (KOSPI200 Index Futures and Options), foreign exchange futures and options including commodities are traded.
Trading securities on the Korea Exchange involves opening an account with a KRX member firm, which will receive trading orders from the client and pass same on to the exchange for order execution. The Korea Exchange operates a 6 hour trading period. Quotations from customers are received an hour earlier up to the end of the trading session and a pre-open auction session is held about 30 minutes before the commencement of receipt of customer quotations.
The official incorporation of KRX into the FTSE developed markets index in 2009 signaled that Korea’s capital market had developed to the levels of advanced countries in terms of its size. This has encouraged inflows of investments from advanced countries, leading to qualitative and quantitative growth of the domestic exchange and to the re-evaluation of the value of domestic blue chip companies.
Meanwhile, KRX continues to promote the advancement and globalisation of the Korean capital market in order to attract foreign companies for listing on KRX. There are currently over 70 foreign companies from 11 countries which are preparing for listing.
With a promising future strategy in place, traders may wish to investigate the possibility of trading opportunities at the Korea Exchange using the services of a regulated binary options broker like Banc De Binary.