The Financial Services Commission headquarters in Seoul (Yonhap)
The Financial Services Commission headquarters in Seoul (Yonhap)

South Korea's financial regulator said Wednesday that it will move to ban "split listing" by conglomerates here, which have long been blamed for hurting shareholder value, and create a two-tier system for the tech-laden Kosdaq market.

The Financial Services Commission (FSC) said it would seek to ban duplicate listing, which occurs when a core business division is spun off and listed separately, a practice that has been frequently favored by large business groups here and cited as one of the major reasons behind the so-called Korea Discount.

The regulator said the long-held listing practices have been hurting shareholder value, and it will ban the practice in principle.

With the measure, the financial authorities hope that the market value of a certain company will be enhanced.

Major battery maker LG Energy Solution's market debut in 2022 had stirred a controversy over the split listing practice.

LG Energy & Solution was spun off from leading chemicals maker LG Chem to ride the electric vehicle craze, which caused its parent company to slump for a long period of time.

The FSC also said it will prod listed companies with a low price-to-book ratio to boost their value via a set of measures such as naming-and-shaming.

The regulator also said it will divide the Kosdaq market into two -- the premium market for heavyweights and the standard market for promising players.

It added that it will develop a new stock index for the premium market players and introduce related exchange-traded funds as well.