South Korea’s stock exchange plans to consider “every option,” including cross-trading and strategic alliances, to respond to mergers and acquisitions among global bourses.
Korea Exchange Inc plans to meet with its Tokyo and Shanghai counterparts this year to discuss cross-trading ventures, Kim Bong-soo, chairman of the Korean bourse, said in an e-mailed statement yesterday.
“If [South] Korea is isolated from the regrouping of global exchanges, KRX could become only a small or medium-sized exchange in Asia,” the closely held exchange said.
The bourse plans to set up cross-trading partnerships with exchanges in a similar time zone, such as those in Japan and Hong Kong, before seeking other opportunities, it said.
Rising competition from alternative trading venues, faster systems and increasing globalization of capital markets had driven almost US$100 billion in exchange mergers in the past 10 years, according to data compiled by Bloomberg.
Deutsche Boerse AG announced a US$9.53 billion takeover of New York-based NYSE Euronext on Feb. 15, less than a week after London Stock Exchange Group Plc agreed to purchase TMX Group Inc of Toronto.
Singapore Exchange Ltd. offered to buy Australia’s ASX Ltd in a cash and share deal in October valued at A$8.4 billion (US$8.5 billion).
South Korea, home to the world’s 13th-largest stock market, also needs to start “thinking” about an initial public offering because it’s harder for an unlisted exchange to forge alliances with publicly traded global exchanges, Kim said.
The bourse said in August 2007 that it had suspended plans to sell its shares after the government called for the operator to surrender its right to review companies for listing or delisting.
Korea Exchange also needs capital to boost its overseas business, according to the statement, which didn’t provide further details on a share sale.
South Korea’s stock exchange is aiming to sell its information-technology system to 30 developing nations and is seeking to lure more foreign companies to list in its stock market to diversify revenue.
Korea Exchange is working with Laos, Cambodia, Vietnam, Malaysia, the Philippines and Uzbekistan bourses to provide systems including platforms for stock trading, market operation, data and derivatives clearing, Park Jong-kil, head of the exchange’s management strategy division, said on Jan. 19.
It helped Laos, Southeast Asia’s smallest economy, open a stock exchange, in which Korea Exchange owns a 49 percent stake. The South Korean company provided information technology systems and trained employees in exchange for the stake.
Korea Exchange has a similar venture agreement with Cambodia, and aims to open a stock market in the nation in July, Park said.
The exchange posted revenue of 367 billion won (US$326 million) in 2009, compared with 296 billion won in 2008, according to a finance ministry Web site that releases information on government agencies.