"No-questions-asked listings will recreate the dot-com bubble" Labor vows all-out fight against ruling party's push to spin off KOSDAQ

[Financial News] Labor groups are raising their voices against the government's and ruling party's plan to convert the Korea Exchange (KRX) into a holding company and spin off the KOSDAQ Market. They argue that easing listing requirements will encourage "no-questions-asked listings" of weak companies and could bring back a "dot-com bubble."
The National Office & Financial Service Workers' Union Korea Exchange Branch held a "general assembly of union members and all-out struggle rally" at 12 p.m. on the 4th near Cheong Wa Dae Sarangchae in Jongno-gu, Seoul. Participants chanted slogans such as "Withdraw the separation of KOSDAQ. This is the return of the dot-com bubble" and "Splitting off market surveillance will breed unfair trading. Turning the exchange into a holding company will destroy the capital market." Around 350 people took part in the rally.
Wearing mourning clothes, Park Kyung-hwan, head of the Korea Exchange Branch, took the podium and said, "The name Korea Exchange is on the verge of disappearing into history, and our colleagues are about to be broken up and torn apart into subsidiaries." He continued, "I could give a one-hour speech on how global management trends are unfolding at NASDAQ or Japan Exchange Group (JPX), but we have no logic to offer to those who respond with no logic. We will fight to the end." Labor representatives argue that, unlike the KOSDAQ Market, which is one of several markets within the Korea Exchange, the Nasdaq Stock Market (NASDAQ) itself is a multi-market exchange system, making the government's and ruling party's slogan of "Nasdaqization of the KOSDAQ Market" a structurally flawed comparison.
Lee Jae-jin, head of the National Office and Financial Services Workers' Union, added, "If you separate the KOSDAQ Market, will loss-making venture companies suddenly be able to rake in cash?" He went on, "Did the KOSPI plunge more than 800 points yesterday and today because the Korea Exchange has not yet been converted into a holding company? If the Financial Services Commission writes market delisting standards into law and strengthens the market capitalization criteria, we can fully ensure market soundness." He also argued, "What undermines market soundness is political interference in the market," and stressed, "Without asking for our views even once, they talk as if a single word from the president can convert the exchange into a holding company and spin off the KOSDAQ Market. This kind of political game has to end now."
Seo Dong-su, head of the public finance sector at the National Office and Financial Services Workers' Union, also said, "They say they want to build an advanced capital market and exchange, but the method is truly backward." He continued, "No one has properly explained why separating the KOSDAQ Market would strengthen market competitiveness or revitalize trading. They need to stop treating the Korea Exchange organizational chart like a drawing contest and start listening to the voices of market participants and workers." Labor groups maintain that if the KOSDAQ Market is spun off as a separate market and underprepared, weak companies without sufficient "listing capacity" are pushed in, market surveillance and competitiveness will be undermined and the dot-com bubble of 1999 could be replayed.
In addition, the union placed around ten condolence wreaths on the first floor of the Korea Exchange building in Yeouido, Seoul, on the 10th of last month. The ribbons carried messages such as "Five parachute posts created by converting to a holding company" and "Stop state-controlled finance through subordinate holding companies."

Earlier, Democratic Party of Korea (DPK) lawmaker Kim Tae-nyeon on the 6th of last month proposed an amendment to the Financial Investment Services and Capital Markets Act. The bill would convert the Korea Exchange into a holding company and split each market into subsidiaries, allowing listing, surveillance, and delisting standards tailored to each market's characteristics to be designed under an independent operating structure. The move is seen as an attempt to lower entry barriers for promising venture companies and startups. The amendment also includes provisions to establish an independent Market Surveillance Corporation and to outsource clearing and settlement operations.
Explaining the rationale for the bill, Kim said, "The KOSDAQ Market was launched to support the growth of technology and innovative companies and to create a virtuous cycle of risk capital, but for a long time it has been operating under a single KOSPI-centered structure, and critics have said its identity and function have not been fully realized." He added, "Through this bill, we aim to redefine the KOSDAQ Market as a growth platform for innovative companies and build a foundation for the sustainable growth of the domestic capital market."
The proposal is understood to follow President Lee Jae-myung's comments on social networking services (SNS) and elsewhere about the need for institutional reforms to the exchange and the KOSDAQ Market. Prime Minister Kim Min-seok also backed the legislative push. During a National Assembly interpellation session on the 9th of last month, when DPK lawmaker Park Joo-min asked, "If the KOSDAQ Market gains independent viability, do you think an era of 3,000 points is possible?" he replied, "Like the KOSPI, the KOSDAQ Market also needs institutional improvements and changes. We will make a comprehensive judgment, including on lawmaker Kim Tae-nyeon's proposal. I hope we can prepare measures that will lead to legislation."
Meanwhile, on the same day the National Office and Financial Services Workers' Union set up a container in front of the Korea Exchange headquarters and launched an indefinite sit-in protest against the proposed extension of trading hours, including opening the market at 7 a.m.
psh@fnnews.com Reporter Park Sung-hyun Reporter