The Korean stock market opened 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 in market closing and
reorganization of its Stock Market Division. Since the mid-1960s, however, the Korean stock market grew rapidly due 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.
Development of Market Infrastructure and Automation of Trading Systems
In order to manage the rapidly growing market, the Stock Exchange made concerted efforts in improving its trading systems and building market infrastructure. It introduced continuous trading in 1975. The order-routing system was automated in 1983, thus enabling member firms to
electronically transmit orders to the trading floor, beginning in 1988. The trading system was fully automated in 1997 and the Exchange began to operate its market without the trading floor.
Relocation to Yeouido
For the efficient trade settlement, the Korea Securities Depository (KSD) was established in 1974, and the Korea Securities Computer Corporation (KOSCOM) in 1977 to facilitate the computerization of the securities industry. With the growing business, the physical expansion was necessary
and the Exchange was moved into the present location in Yoido, thus creating Yeouido as a Korean version of "Wall Street".
Improving Services for Foreign Investors
Since early 1980s, the Korean stock market gradually became open to foreign investors. As the first step, international investment trusts and country funds such as the Korea Fund were launched, thus allowing foreigners to make indirect portfolio investment, In 1992, the Korean stock
market became open to foreign investors with certain restrictions; the foreign share ownership restrictions were gradually lifted and were fully eliminated in 1998. Additionally, the membership for the Korean Market was opened to foreign securities companies.
Establishment of Reliable and Transparent Market
The KOSPI Market Division undertakes various measures to ensure the establishment of fair market price and protection of investors. For instance, by listing stocks of corporations with the growth potentials, credibility and profitability, the investor risks are minimized and the
corporate disclosures, which provide information necessary for the investment decisions, are made available through the electronic disclosure system that can be accessed by investors, both in Korea and else where, on the Internet. The KOSPI Market Division also has taken up a leading role in improving corporate governance practices in Korea.
User-oriented and Internationally Competitive Market
After the financial crisis in 1997/8, the Korean securities market implemented a broad range of market reforms, with special attention to strengthening market infrastructure, accelerating deregulation, and enhancing investor protection and market efficiency. The KOSPI Market puts
emphasis on international cooperation, thus promoting long-term cooperation and collaboration with other exchanges, and in order to respond to the globalization and requirements of post-industrial information society, the KOSPI Market continues to upgrade its computer systems with the latest
information technology. Efforts are underway to facilitate the listing of Korean companies on the foreign exchanges, thus reducing the market entry barriers, and to harmonize the rules and regulations, including the trading and settlement systems, with global standards.