Seoul: South Korea's bourse operator announced it will implement stricter rules for initial public offerings (IPOs) and delisting in an effort to bolster market confidence. The Korea Exchange (KRX), the sole operator of the country's stock market, is currently reviewing a series of enhanced regulations for both new market entrants and those failing to meet listing requirements.
According to Yonhap News Agency, the Financial Services Commission (FSC) revealed that starting in 2026, over 40 percent of IPO shares will be allocated to institutional investors who commit to holding these shares for a designated period, typically three to six months. Presently, about 20 percent of IPO shares are sold to such institutional investors to facilitate a smooth market debut for new companies.
Additionally, the FSC plans to reform delisting regulations to expedite the removal of companies unable to meet specified criteria. Beginning in 2029, companies with a market capitalization below 50 billion won (approximately US$34.47 million) and revenues under 30 billion won will be delisted from the main bourse. Currently, delisting occurs when a company's market capitalization or sales fall below 5 billion won.
The new regulations will also shorten the delisting process period to a maximum of two years from the current four years. Companies receiving inappropriate audit reports for two consecutive years will face immediate delisting, as stated by the FSC.
The KRX aims to attract more investors by improving market operations and enhancing investor protection regulations as it prepares to launch the country's secondary bourse in March. Additionally, the KRX will introduce overnight trading for 10 financial derivatives products, including the Korea Composite Stock Price Index (KOSPI) 200 futures, from 6:00 p.m. to 6:00 a.m., allowing investors to better manage market volatility.
Furthermore, the KRX is intensifying efforts to include the Korean stock market in the Morgan Stanley Capital International (MSCI) index, which could potentially increase international investment in South Korea's financial markets.