The Korea Exchange is currently facing significant internal unrest following the recent notification from the Financial Services Commission regarding its 2025 management evaluation results. Historically, the exchange has received top ratings of S or A, but this time it was downgraded to a B, marking its first drop in ten years since 2016.
The impact of this downgrade is substantial. Employee bonuses have been cut from 200% to 100% of their base salary, and the salaries of executives have also been reduced by millions of won. Employees, who have already been struggling with stagnant wages due to government controls on inflation since 2021, are expressing frustration, stating, "We are already constrained by government oversight, and now our bonuses have been halved, leaving morale at an all-time low." What led to this situation?
◇ 12 Years of Financial Services Commission Control
Currently, the Korea Exchange operates as a private corporation rather than a public enterprise, with major securities firms and financial institutions as its shareholders. However, in 2009, during the Lee Myung-bak administration, the government designated the exchange as a quasi-government agency, citing mismanagement. This designation imposed various regulations and restrictions on the exchange. After years of demands for deregulation, the exchange was officially removed from the public institution list in 2015.
The issue lies in the conditions attached to this deregulation. The Financial Services Commission required the exchange to sign a separate 'management agreement' that, while labeled as an agreement, effectively allowed the commission to control the exchange's budget, employee salaries, and overall operations.
Internal dissatisfaction stems from the perception that the exchange is merely a facade of a private company while still being subject to significant control. In fact, during the high inflation period in 2021, the exchange faced a wage freeze due to the commission's oversight. One employee remarked, "There seems to be a negative perception from the Financial Services Commission towards the exchange as a 'high-salary organization.' It would be strange if the government controlled Samsung Electronics' salaries. It's frustrating to be bound by a hierarchical relationship defined by this agreement."
◇ Unclear Reasons Behind the Downgrade
A more pressing concern is the ambiguous circumstances surrounding the downgrade from S to B.
Reports indicate that the Financial Services Commission cited infrastructure stability issues, including a system failure in March 2025 that led to a seven-minute trading halt and the suspension of certain stocks, as a reason for the downgrade. However, many within and outside the exchange question whether a two-tier downgrade is justified given that the exchange reported a 67% increase in net profit to 708.9 billion won compared to the previous year.
There are also speculations in the financial investment community that the controversy over single-stock leverage, which emerged earlier this year, may have influenced the evaluation. Critics argued that single-stock leverage involving companies like Samsung Electronics and SK Hynix increased volatility in the domestic market, leading the Financial Services Commission to feel pressured and significantly reduce the qualitative evaluation score of the exchange.
The issue revolves around 'temporal consistency' and 'accountability.' This evaluation pertains to the performance of 2025. If the controversy over single-stock leverage, which arose in 2026, was retroactively factored into the evaluation, it raises concerns about the integrity of the assessment. Moreover, the introduction of single-stock leverage was not a unilateral decision by the exchange but a policy initiative approved by the Financial Services Commission and the Securities and Futures Commission.
Some argue that while the financial authorities collaboratively established the policy, they are now placing the blame for the negative public sentiment and subsequent evaluation downgrade solely on the exchange. The Financial Services Commission maintains that the single-stock leverage and the downgrade are unrelated, emphasizing a blind evaluation process, but the lack of transparency regarding specific reasons for the downgrade has only fueled rumors and distrust.
◇ "Global Competition is Fierce, Yet We Are Handcuffed"
In the past, when the exchange held a 100% monopoly over the domestic market, the government's strong oversight and regulation may have been justified. However, the landscape has changed dramatically.
With the launch of NextTrade, a multi-party trading company, in March 2025, the domestic exchange market has entered a phase of intense competition. Additionally, the battle for leadership in artificial intelligence, data, and derivatives with global exchanges in San Francisco, Tokyo, and Singapore is fierce. In a time when attracting top talent and adapting organizational structures is crucial, the exchange finds itself constrained by an outdated management agreement and opaque evaluation processes.
The exchange's labor union has also called for the revision or abolition of the management agreement, arguing that it undermines financial competitiveness, but the barriers to change remain high.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.