What changes on the Kosdaq
The Korea Exchange is considering introducing a multi-tier system for the Kosdaq, the South Korean market dedicated mainly to growth companies. The Korea Herald reports this, citing financial industry sources according to whom the exchange is considering dividing listed companies into an upper and a lower tier. The upper tier, provisionally called the Select Segment, would group companies that meet quantitative criteria, including financial results.
The reference model is the one adopted by Nasdaq in 2006, structured into three listing tiers: Global Select Market, Global Market and Capital Market. The Korea Exchange would in turn be working on premium, standard and watchlist segments, each with distinct admission and continued-listing requirements. This would therefore not be a simple label, but differentiated rules for entering and remaining in the market.
The stated reasons and timeline
According to a Korea Exchange official cited by the newspaper, before the introduction of the Nasdaq system many companies moved to the New York Stock Exchange, while afterward the trend reportedly reversed, with companies moving from the NYSE to Nasdaq. The official added that leading biotech and artificial intelligence companies should enter the upper tier and serve as examples, and that the Kosdaq, which entails more risk than the Kospi, must offer returns that justify that risk.
On timing, the Korea Exchange plans to define the detailed criteria after the publication of companies' annual results, in April next year. Financial results are cited as one of the key quantitative indicators: if the work begins after the April data, the system could debut in the second half of next year at the earliest. This is therefore a conditional timeline, not a fixed date.
How the segments would be organized
The premium segment would be intended for large, mature companies: eligibility would depend on market capitalization, revenue, profits and corporate governance, not on a predetermined number of companies. The standard segment would cover growth-stage companies, with the possibility of additional disclosures on development plans, earnings forecasts and preliminary results. Companies at risk of delisting or with trading risks would be placed in a separate watchlist segment.
The official ruled out fixed limits, such as 100 or 120 companies, specifying that the upper tier could initially account for 10 percent of listed companies, with the ambition of rising to 30 percent as more companies grow and move up a tier. Future composition will therefore depend on the criteria and on performance, two elements yet to be defined.
The funding issue and what remains open
The plan has raised concerns about a possible concentration of capital in the upper tier, to the detriment of companies placed at the lower levels. The Korea Exchange is considering public funding and investment incentives to support them; the same official acknowledged the fear of funding gaps for companies in the lower tiers, indicating that work is underway on how to differentiate the system from the Kosdaq 150 index and how to offer public support and investor incentives.
However, specific details remain to be decided, including tax benefits. The Korea Exchange plans to consult industry participants on the criteria and support measures. The picture is therefore evolving: the choice to emulate Nasdaq introduces a sharper selection among companies, but the overall effect will depend on thresholds, incentives and the ability to prevent the lower tiers from being left without capital. On these points, the available material does not yet offer answers.
