Trading of Treasury Stocks by Listed Corporations
Trading of treasury stocks in the exchange market is separately regulated to minimize the impact on market prices and to avoid the possibility of unfair trading such as misuse of inside information.
Opening of an account for treasury stock trading
In order to trade treasury stocks, a listed company needs first to open a separate account with a securities company. No other securities, except for treasury stocks can be traded through the account.
Application for trading of treasury stocks
When a listed company intends to acquire/dispose treasury stocks, the company must acquire/dispose the treasury stocks within 3 months from the next day of the disclosure of the BOD resolution. When a member receives an order from the listed company for the treasury stock trading, the member must disclose the content including the issue and quantity in advance of the trading. In addition, the member must file an application for treasury stock trading with the exchange within the period from the regular session closing and 18:00 one day prior to the planned trading day.
Restrictions on quotation prices
Members should place the order within the price range as specified below, after receiving the order from the listed company on the trading day. The order placement must be made by 15:00, which is 30 minutes before the regular session closing. After then, members are not allowed to place orders to trade treasury stocks. In case of the disposal of treasury stock, trading through the regular market is not permitted, disposal is only allowed through the off-hours market for specific purposes(proportional disposal to shareholders, employee compensation, the employee stock ownership plan and management purposes).
Price Range in the regular session
Price Range in the regular session
Submission Time Bid
Opening Auction
(08:30~09:00)		 Lower Limit: Closing Price of the previous day
Upper Limit: Closing Price of the previous day+5%
Regular Session
(09:00~15:00)		 Lower Limit: 5 quotation lower than the higher one of the last price and the best bid quotation
Upper Limit: 5 quotation higher than the higher one of the last price and the best bid quotation
주의In case where there has not been a trade until the placement of the treasury stock order, the base price for the day will be regarded as the 'last traded price', and 'the best expected bid(offer) quotation' will be regarded as the 'the best bid(offer) quotation'
Cancelling of already placed orders is not allowed while price corrections are allowed within the price range above. In addition, as the treasury stock trading has restrictions on quotation, only limit orders are allowed.
Restrictions on quotation quantity
The maximum quantity of quotation for a day per issue is within 1% of the total shares issued, up to the larger of; i) 10% of the quantity in the acquisition(disposal) application and ii) 25% of average daily trading volume for the last one month.
Treasury stock trading through off-hours block trading
Treasury stocks can be disposed through the off-hours block trading. In this case, the price range is between the 5% higher and 5% lower of the closing price (within upper and lower price limit of the day) for the day (the previous day in case of off-hour session before the market opening.) However, acquisition of treasury stocks through off-hours trading is allowed only when the stocks are to be acquired from the government or the government issued a guidance/recommendation followed by the authorization by the FSC. In this case, the price range to acquire will be the same as off-hours block trading with the exception, where there is no such price range or daily price limits, for the cases of acquisition from the KDIC or acquisition under the authorization by the FSC. Although the quantity restriction is not applied for the treasury stock trading through the off-hours block trading, the application should be filed one day prior to the trading.
In the meantime, when a trustee wants to have trading under a trust agreement, it must open a separate account per each trust agreement. Other requirements such as the range of quotations are the same as general treasury stock trading by listed corporations. However, to prevent frequent treasury stock trading, re-disposal (re-acquisition) of the acquired (disposed) stocks within one month is not allowed and the daily order quantity is limited up to 1% of the total shares issued.