Exchange to Hold KOSDAQ Segment Public Hearing in Q4, Aiming for Introduction Next Year (Comprehensive)

Referencing the Restructuring of the U.S. NASDAQ

Distinction of Leading Companies as "KOSDAQ Select"

Recommendations for Strengthening KOSDAQ Competitiveness

Korea Exchange is planning to introduce a “segment system” for KOSDAQ-listed companies in 2025, which will categorize companies based on their specific characteristics. This move will follow public hearings, opinion gathering, and regulatory amendments beginning in the fourth quarter of this year.

Choi Jiwoo, Executive Director of the KOSDAQ Market Division at Korea Exchange, is giving a presentation on "Measures to Enhance the Competitiveness of the KOSDAQ Market" during the "KOSDAQ Market Competitiveness Enhancement Measures" session on the second day of "Korea Premium Week 2026" held at The Grand Lotte Seoul in Jung-gu, Seoul on September 29, 2026. Photo by Kim Hyunmin

Jiwoo Choi, Executive Director of the KOSDAQ Market Headquarters at Korea Exchange, announced this implementation timeline on September 29 at the “Korea Premium Week 2026,” the largest investor relations (IR) event in the domestic capital market, held at The Grand Lotte Seoul in Jung-gu, Seoul. The segment system will be structured so that general KOSDAQ companies can advance to a so-called “KOSDAQ Select” if they grow to become leading enterprises, while underperforming companies will be classified into a separate category tentatively titled the “management segment.”

Choi stated, “In the past, NASDAQ was perceived as a secondary market, but it has established a segment system and now leads the wave of change as the world’s largest advanced technology market. Our ultimate goal is not to simply rank companies, but to create a dynamic market structure that matches the growth stages and unique attributes of each company.”

Choi continued, “Looking at the number and ratio of delisted companies among major exchanges, KOSDAQ (with an average of 32 per year and a ratio of 1.8% from 2024 to the first half of 2026) has the lowest among its peers. While market entry has been active, exits have been limited—a structure that has allowed underperforming companies to linger and has added to the overall burden on the market.”

He also asserted, “The purpose of strengthening the delisting of underperforming companies is not merely to increase the number of delisted firms. The more important thing is to reduce the cost to the entire market caused by the long-term presence of such companies. We will foster an environment where innovative companies can continue to grow within the KOSDAQ and where investors can more easily discover promising firms.”

Minkyung Wook, Head of the KOSDAQ Market Headquarters at Korea Exchange, commented, “Now is the time to move beyond quantitative growth and repeatedly achieve qualitative improvement. As investors’ expectations are rising towards global standards, the KOSDAQ must also transform itself into a market that commands a premium, not a discount.”

The Headquarters Chief added, “Korea Exchange is advancing the fundamental reform of KOSDAQ from two perspectives: market structure and listed companies. We are promoting the adoption of a promotion and relegation system for the KOSDAQ, with the primary goal of expanding investment demand.” He continued, “To promote improvements among listed companies, we are reinforcing flexible entry standards and strict exit criteria. We are committed to quickly removing companies that disrupt market order or become targets for unfair trading, thereby restoring market trust and preventing harm to good-faith investors.”

Hwang Seung-taek, Head of the Research Center at Hana Securities, is delivering a presentation titled "Diagnosis of the KOSDAQ Market: The Market’s View on KOSDAQ" during the "Enhancing Competitiveness of the KOSDAQ Market" session on the second day of "Korea Premium Week 2026" held at The Grand Lotte Seoul in Jung-gu, Seoul on September 29, 2026. Photo by Kim Hyunmin

To strengthen the competitiveness of the KOSDAQ market, experts have suggested increasing the share of investment by pension funds, shortening the delisting process for underperforming and marginal companies, and diversifying market inflows.

Seungtaek Hwang, Head of Research Center at Hana Securities, pointed out, “While the number of KOSDAQ-listed companies continues to rise, average profitability per company has weakened. The top 10 companies by market capitalization account for about 18.5% to 25% of the total, indicating growing polarization.”

Hwang noted, “Approximately 75% to 80% of average daily trading volume comes from retail investors, with a very low share from institutional and foreign investors. This weak supply-and-demand environment means that market volatility due to external factors is causing accelerated investor outflow.”

He further identified these structural constraints: limited information accessibility for foreign investors, key decision-making concentrated among major shareholders and inadequate shareholder returns, and a lack of effective mechanisms to expel underperforming or marginal companies.

Hwang explained, “If pension funds increase their KOSDAQ holdings by just 1%, this could bring in approximately 12.5 trillion to 13 trillion won in new capital. Since most trading is driven by retail investors, pension fund inflows could dramatically improve both passive and mid-to-large-cap liquidity in KOSDAQ.”

He emphasized, “The review periods for both new listings and delistings should be reduced from the current 1.5 to 2 years down to within six months, and specialized review bodies or institutions should be established. To promote the growth of strong innovative companies and fundamentally improve the KOSDAQ, a stringent and expedited exit track for underperformers is essential.”

Tae Hyuk Lim, Executive Director of ETF Management at Samsung Asset Management, remarked, “Pension and other institutional funds invest in indices with long-term upward potential. For institutional investment in the KOSDAQ, the market must, like KOSPI, have both highly profitable and innovative companies.”

Sohyun Kang, Head of the Capital Markets Division at the Korea Capital Market Institute, advised, “It is time to redefine the role of the KOSDAQ. While the past focus was on how many innovative companies were listed, the market now needs to evolve into one in which these companies can grow even larger after listing and attract long-term capital.”

This content was produced with the assistance of AI translation services.