Korea Exchange Considers "Absolute Evaluation" for KOSDAQ Tiered System... "Not Finalized"

Korea Exchange in Yeouido, Seoul. Photo by Kang Jinhyeong aymsdream@

The Korea Exchange is reportedly considering an “absolute evaluation” approach for setting the criteria for entry into the upper tier of the KOSDAQ tiered system, under which all companies that meet certain requirements would be included in the upper tier.

According to financial investment industry sources on Oct. 22, the exchange is considering a plan under which KOSDAQ-listed companies could be placed in the upper tier, “Select,” if they meet certain criteria. The exchange said, however, that this is just one of several options under consideration and has not been finalized.

The KOSDAQ tiered system is designed to manage listed companies by dividing them into groups, including the upper tier, Select, and the general tier, Standard. Ahead of the system’s introduction, market attention has focused in particular on the criteria and evaluation methods for entry into Select.

The exchange was initially expected to draw up detailed plans for operating the KOSDAQ tiered system around July this year. However, discussions on the matter were postponed until next year after calls emerged for more sophisticated detailed criteria to minimize potential adverse effects from introducing the system.

Some in the venture industry have also raised concerns that the introduction of the tiered system could entrench a hierarchy among companies in the market. In particular, they have warned of a potential stigma effect, whereby companies placed in the lower tier could be viewed by investors as “low-quality companies.”

Accordingly, the exchange is understood to be considering various system designs, including not only a method of dividing companies based on their relative rankings but also a plan to place companies that meet certain absolute criteria in the upper tier.

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