The idea of separating the tech-laden secondary stock market from the main bourse will not only increase operating costs, but also weaken market soundness and customer protection, according to the Korea Exchange.

“The Korea Securities Dealers Automated Quotations, which mostly involves small-sized venture capital, is already differentiated from the main bourse Korea Composite Stock Price Index in size, capital, and characteristics,” said an official of the stock operator.

“The spinoff is more likely to turn into an anticlimax, in which case it will deliver a blow to the government’s creative economy policy.”

The Financial Services Commission recently indicated it would seek to separate the two markets, mostly to prevent KOSDAQ firms from moving over to the KOSPI and thus to secure the share of venture capital in the stock market.

The KRX, however, cited the fact that movements from KOSDAQ to KOSPI were more active back in the days when the two bourses were separated.

“After we integrated the two markets in 2005, we were able to give out recommendations as the single governing body, asking KOSDAQ firms to restrain from moving onto the KOSPI,” the official said.

“But should the KOSDAQ detach itself from the main bourse, there will be no stopping venture capital firms from breaking away from the secondary market.”

Also, considering the fast expansion of the KOSDAQ in recent years, it is doubtful that the separation would offer any additional growth momentum, the official added.

“It was the KRX that embraced the heavily-indebted KOSDAQ and nurtured it to its current status, despite numerous challenges along the way.”

By Bae Hyun-jung (tellme@heraldcorp.com)