SEOUL, Jan 29 (Reuters) - South Korea’s finance ministry said on Thursday it has decided to put the country’s sole bourse operator Korea Exchange (KRX) under state control, a move that could further hamper the bourse operator’s attempt to go public.
The decision comes after the Board of Audit and Inspection proposed in September that KRX, owned by brokerages and futures companies, should be made a public institution because of its monopoly position.
“KRX’s stake is divided among 43 different brokerages, and their stakes individually are so small and hardly wield any power,” said Kang Sung-jun, a director at the ministry’s System Planning Division.
Being put under state control means KRX will be subject to inspections by both the audit agency and the Parliament.
The government will also have the power to appoint top KRX executives and determine its budget.
KRX officials have repeatedly criticised the decision as outdated and argue it may hamper its efforts to increase global operations through alliances with other exchanges.
“The decision will certainly be negative to our global business plans... our overseas peers will find it less advantageous to form meaningful alliance with us, since the decision weakens our management independence,” said a KRX spokesman, who asked not to be named given the sensitivity of the issue.
But the ministry’s Kang played down these concerns, saying the government was open to further discussions to help the bourse operator.
KRX has tried to turn public since 2003, but has been stuck in a tussle with the government over how to reform the exchange and how to use the proceeds from an initial public offering.
KRX, the world’s No.3 derivatives exchange, is the sole bourse operator in South Korea after it absorbed the Korea Futures Exchanges and the junior Kosdaq markets.
South Korea privatised the exchange in 1988.
Reporting by Jungyoun Park; Additional reporting by Kim Yeon-hee; editing by Marie-France Han and Valerie Lee
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