A legal change and improvements in management allow for the privatization of Korea Exchange, the nation’s stock operator, according to the Finance Ministry, but it still remains unclear when and how it will take place.

The Financial Services Commission, the direct supervisory office for the KRX, suggested that it was time to consider re-privatization but the ministry is taking a more passive stance.

According to the Finance Ministry and the FSC on Tuesday, KRX has eliminated the factors that have kept it from being privatized over the past six years.

“The KRX is now legally qualified for privatization as it is no longer the monopolist in the market,” said a ministry official.

The revision bill of the capital market act, which was approved by the National Assembly in December, allows the establishment of an alternative stock exchange, other than the KRX.

The stock operator has also broken free from “lax management,” a label which has long held it back from re-privatization.

Late last year, the KRX received 82.85 points out of 100 for management integrity and was excluded from the government’s priority control target group.

The achievement was attributable to its tight restructuring efforts, such as decreasing the employees’ average welfare costs to 4.1 million won per year ($3,740) last year from 13 million won in 2013.

High staff costs were the main reasons KRX found itself in the worst category for management of state-run firms.

“Once (the elimination of lax management factors) is confirmed, we will take the due measures,” said Finance Minister Choi Kyung-hwan at the parliamentary audit in October.

Reflecting the improvements, the FSC is planning to submit a KRX privatization issue to the ministry’s Public Fund Oversight Committee this month. The supervising body holds its general meeting in late January every year, to assess all public organizations and to judge whether they should be kept within the public sector or whether they may be privatized.

“Even if KRX was to be privatized once again, it will continue to remain under FSC supervision so is not likely to resume its former lax management habits,” said an FSC spokesperson.

But the ministry is more cautious about allowing the bourse operator to reprivatize.

“We should carefully check whether there are other prerequisites (for privatization), and the related decision is up to the PFOC, not the FSC” said a ministry official.

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