KOSDAQ

KOSDAQ, short for Korean Securities Dealers Automated Quotations, is an electronic stock exchange in South Korea. It is generally considered the equivalent of the NASDAQ in the United States, focusing primarily on technology and growth companies. KOSDAQ is operated by the Korea Exchange (KRX).

History:

Established on July 1, 1996, KOSDAQ was created to provide a platform for smaller and emerging companies to access capital markets and gain exposure to investors. It was designed to offer a less stringent listing requirement compared to the main board, the KOSPI (Korea Composite Stock Price Index).

Purpose and Function:

The main purpose of KOSDAQ is to facilitate the raising of capital for small and medium-sized enterprises (SMEs) with growth potential. It also allows investors to participate in the growth of these companies. KOSDAQ provides a transparent and efficient trading environment for listed securities.

Listing Requirements:

The listing requirements for KOSDAQ are generally less stringent than those for the KOSPI. Factors considered include the size of the company, profitability, financial stability, and corporate governance. Specific requirements are subject to change and are regulated by the Korea Exchange.

Trading and Settlement:

Trading on KOSDAQ is conducted electronically through the KRX's trading system. Settlement is typically handled through a central depository.

Market Indices:

The primary market index for KOSDAQ is the KOSDAQ Composite Index, which reflects the overall performance of the market.

Regulation:

KOSDAQ is regulated by the Korea Exchange (KRX) and the Financial Services Commission (FSC) to ensure fair and transparent trading practices and to protect investors.

Relation to KOSPI:

KOSDAQ is distinct from the KOSPI, which is the main stock exchange in South Korea. The KOSPI lists larger, more established companies, while KOSDAQ focuses on smaller, growth-oriented firms. Companies may choose to list on KOSDAQ as a stepping stone to a potential future listing on the KOSPI.