Harmonization Of Trading Rules Of The Stock Market And The KOSDAQ Market

The trading rules of Korea’s two stock markets, the Stock Market Division and the KOSDAQ Market Division of the Korea Exchange, will be harmonized to prevent confusion amongst investors arising as a result of the differences between the rules of the two markets and to reduce IT costs for securities companies.

However, the specific provisions of the rules governing the unique aspects of the individual markets will remain intact.

Major Changes

The following rules of the KOSDAQ Market will replace the corresponding rules of the Stock Market Division

The quotation unit for ETFs will be unified as 5 won.
In the event of moving from the KOSDAQ Market to the Stock Market, the closing price of the last trading day will be valid as the basis for determining the starting price.

The following rules of the Stock Market Division will replace the corresponding rules of the KOSDAQ Market

The limit-to-market-on-close quotation will be introduced into the KOSDAQ Market.
The definition of short selling will be clarified and expanded to include “sale without actually owning stocks”.
- The permissible scope of short sale will be expanded to include the sale of stocks after having requested the conversion of DRs and sale before returning the borrowed stocks. The effects of price regulations will be increased by limiting quotations to less than the immediately preceding price, except in a rising market.
The basis for determining a system failure and the methods of market management will be clarified and specified.
In case of a stock repurchase from a public entity through off-hours block trading, same-day settlement will be allowed.
DRs of foreign listed stocks will be included for determining collateral prices.
Changes in the contract and the criteria for imposing margins and fees should be notified within 5 days.

Effective Date: Rules will be harmonized gradually as the IT systems required to accommodate the changes are developed and become operational.