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Korean Stock Market Newsletter
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Korean Stock Market was opened its
market in 1956 with 12 listed companies. During its
early years, Korean Stock Market was more of a government
bond market, and the level of stock trading was insignificant.
It also experienced a series of market crashes, resulting
of market closing and reorganization of its Stock Market
Division. Since mid 1960s, however, Korean
Stock Market grew rapidly, owing to a series
of government actions aimed to develop a capital market,
which could support the national economic development
plans, and to encourage privately-owned companies to
go public. Examples of the important legislations enacted
for these purposes are the Securities and Exchange Act
of 1962, the law on Fostering the Capital Market of
1968 and the Public Corporation Inducement Act of 1973.
Unfair trading is generally regulated by the legal regulation
and self-regulation.
Self-regulation is the actions voluntarily taken by the market participants
for the purpose of establishing
the fairness and soundness of the market and is normally implemented
through a membership organization.
Examples of such self regulatory organizations in Korea are the KSE,
KSDA (Korea Securities Dealers Association) and
KOFEX (Korea Futures Exchange).
On the contrary, legal regulation is the ultimate regulation of the
market through
the supervision of the self regulatory organizations and is carried
out by the government or supervisory agencies.
Examples of such agencies in Korea are the FSC and Financial Supervisory
Service (FSS).
Unfair trading is regulated to enhance the market transparency and
reliability,
and to protect investors through the establishment of fair market
prices and orderly transactions.
Price movement of liquid assets is directly related to the stability
of the securities market
and the consumer prices, interest rate, tax base decision, etc. are
negatively affected by the market instability.
Thus, the maintenance of fairness and reliability of market price
is a prerequisite for the strong national economy.
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