Key Institutions Closely Linked to Stock Investing

For financial investment to operate stably, various institutions must each be run professionally according to their roles.
Let's look at the public institutions responsible for Korea's investment products and their roles
▪︎ Financial Supervisory Service : This is the institution that manages and supervises financial affairs across Korea as a whole.
All public institutions and companies engaged in financial business, including banks, securities, insurance and cards, are monitored by the Financial Supervisory Service, and the Financial Supervisory Service is Korea's highest supervisory special corporation, able to impose sanctions on financial institutions and companies under the law.
The Governor, Senior Deputy Governors and Auditor of the Financial Supervisory Service are senior public officials, and the Governor of the Financial Supervisory Service is appointed by the President.
▪︎ Korea Exchange : A company that comprehensively handles and oversees the trading of financial investment products.
Korea Exchange operates as a membership organization (here, members means financial investment companies and banks), and ordinary individuals cannot participate directly in Korea Exchange to trade.
(You can trade on Korea Exchange through a securities company after opening an account with it)
Korea Exchange's main markets are the KOSPI, KOSDAQ, KONEX and derivatives markets, and trading takes place every business day.
Its other roles include market management and surveillance, company listings and disclosure management.
▪︎ Korea Securities Depository : A company responsible for the safekeeping of securities.
It is a company that centrally deposits and keeps all physical and electronically issued securities of investment products such as stocks, bonds and promissory notes.
When securities are traded or transferred, all the actual certificates are kept at the Korea Securities Depository; securities companies merely show the balance in your account and do not hold the actual certificates themselves.
Accordingly, the Korea Securities Depository also performs deposit-related tasks such as book-entry transfers of securities, balance management by member firm and management of securities rights.
▪︎ Korea Financial Investment Association : A self-regulatory organization established under the Securities and Exchange Act to maintain order among securities companies.
It mediates disputes between securities companies and carries out common tasks for the development of the securities industry.
It also handles education management for the securities business (job training and certification exams) and manages the over-the-counter market, which is not traded on Korea Exchange.
▪︎ Korea Securities Finance Corporation: A joint-stock company under the Commercial Act established to provide funding support to the securities industry.
You can think of it as the bank for securities companies.
When a customer deposits money with a securities company and buys stocks, you can think of it as the stocks being managed by the Korea Securities Depository and the cash being deposited with and managed by the Korea Securities Finance Corporation.
It manages securities companies' money and also provides loans secured by securities.
Its largest shareholder is Korea Exchange.
▪︎ Alternative Trading System (ATS) : Like Korea Exchange, it is Korea's second exchange where securities such as stocks are traded, and because it is operated by a company called Nextrade, it is also called the Nextrade market.
Nextrade is a corporation jointly funded by 34 related institutions and securities companies, and its largest shareholder is the Korea Financial Investment Association described above.
It is scheduled to launch in the first half of 2025, and like Korea Exchange, securities such as stocks and bonds will be traded on it.
The alternative trading system (ATS) only handles the execution of securities trades that Korea Exchange does, and does not handle tasks such as listing new stocks or market surveillance for unfair trading.
The alternative trading system (ATS) trading hours are from 8 a.m. to 8 p.m., which differ from Korea Exchange's trading hours, and night trading is possible even after Korea Exchange's regular session closes.
▪︎ Virtual asset exchanges : Virtual asset exchanges are not financial public enterprises but private companies. However, because they are closely linked to financial investment, let's go over them.
They are ordinary private companies where you can trade virtual assets (cryptocurrencies).
In stock investing, trades are executed on the exchange and orders are placed through securities companies.
Virtual asset exchanges, however, unlike Korea Exchange, are private companies that handle both execution and orders.
The best-known coin is Bitcoin.
Unlike Korea Exchange, where stocks and bonds are traded, there are many virtual asset exchanges, and Korea's leading virtual asset exchanges are Upbit, Bithumb, Coinone and Korbit.
Because there are several virtual asset exchanges, competition is intensifying among them, and since fees and available products differ by exchange, investors can choose the exchange that suits them best to trade virtual assets.