KRX Chairman Sohn Byung-doo announces KRX’s key strategies during a meeting with reporters at KRX Office in Seoul on March 31. (Photos: KRX)

Korea Exchange plans to introduce an ESG investment index to help listed companies cope with a paradigm shift into environment, social and governance (ESG) regime. KRX has launched the development of an investment index using ESG.

KRX Chairman Sohn Byung-doo said in a meeting with reporters at KRX Office in Seoul on March 31 that a study was under way to make “Price to ESG,” similar to something such as price-earnings ratio (PER) and price-on-book-value ratio (PBR).

It means that total capitalization of listed companies’ market prices will be calculated compared to ESG evaluation index. If ESG index is high and capitalization is low, it would lead to investors’ money inflows. KRX plans to develop EST Theme Fund (ETF) and ESG ETN (exchange traded note).

KRX will launch three climate change indexes — KRX 300 Climate Change Index, Kospi200 Climate Change Index and Kospi200 Climate Change Leaders’ Index.
Celebrating three months in office, Chairman Sohn said, “Efforts will be made to create an environment in which unicorn companies can be listed in Korea.”

Sohn said he looked back at the current situation in Korea, as he expressed regret about Korean companies’ listing abroad instead of Korea.

He said the KRX will make the bourse friendly and attractive to unicorn companies so they can be listed in Korea.

Chairman Sohn Byung-doo of Korea Exchange joins others, including Chairman Kim Hak-kyun of the KOSDAQ Market Committee and Chairman Na Jae-chul of the Korea Financial Investment Association, in a ceremony to mark KOSDAQ Index’s passing the 1,000 threshold on April 12.

Going into force on March 9, a requisite calling for 1 trillion won in market capitalization was introduced. Others, such as equity capital, were relaxed.

KRX will make every effort to attract unicorn companies listed on the domestic bourse in keeping with the government’s steps to boost the IPO market, he said.

KRX will revamp a screening process, reflecting the characteristics of unicorn companies and next-generation growth companies such as battery, bio and internet game companies.

Participants in the certified emission reduction (CER) market will be expanded to include securities companies to promote greenhouse gas emission reduction, carbon neutrality and eco-friendly investments, Chairman Sohn said.

New derivatives, such as CER futures and BBIG futures will be supplied, he added.
TR Makes Its Debut.

KRX launched a trade repository (TR) for OTC derivatives to enhance the safe trading of OTC derivatives on April 1.

Financial investors, such as banks, securities companies and asset management companies, are required to submit to TR information on the trading of OTC derivatives based on basic assets such as interest rates and currencies.

They will be required to report information on the trading of derivatives such as credit loans and general goods on top of stocks starting next January.

KRX Chairman Sohn said, “Gathering information on precise trades is more important for the operation of TR, and concern and support from related institutions and industry circles are essential.”