South Korea’s bourse operator is expected to ease regulations on stock split processes in the wake of market top cap Samsung Electronics’ latest decision to implement a first-ever stock split.

Korea Exchange is expected to announce a revised set of plans later this week to shorten the trading suspension period caused by stock splits, according to the benchmark Kospi operating headquarters Sunday.
 

Under current regulations, stock trading is to be banned for 10-15 days after the given company decides on a stock split, while it rearranges its stockholders’ list.

The stock operator was seeking for ways to minimize anticipated fallout since the announcement in late January by the nation’s top business unit Samsung Electronics to implement a 50:1 stock split as part of its efforts to enhance shareholder value.

Should the plan be approved at a stockholders meeting later this month, all transactions on the company’s stocks are to be suspended from April 25 to May 15. Samsung Electronics generally accounts for some 20 percent of the nation’s market cap.

The KRX had immediately formed a taskforce to prepare measures in anticipation of Samsung’s impact with Korea Securities Depository, IT service provider Koscom, Korea Financial Investment Association, and other securities, futures and asset management firms. 

Upon the discussion, the stock operator decided to revise the overall system for all Kospi-listed firms in order to avoid criticisms of favoring Samsung and using the opportunity to enhance the system.

Companies other than Samsung that have announced their stock splits and awaiting suspension procedure include JW Life Science, Mando, Fila Korea, Kisco Holdings and Korea Flange Co., according to the Kospi headquarters.

It is not yet certain whether the second-tier Kosdaq sector will follow suit.

“Samsung Electronics’ stock split revealed a weak spot of the domestic stock trading system,” said an official of KRX.

“We will also seek to shorten the trading suspension period in cases of merger and capital reduction.”

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