Busan, a city aspiring to become the country’s financial hub, is protesting against separating the over-the-counter Korea Securities Dealers Automated Quotations market from the main stock market.

Headquartered in Busan with offices in Seoul, the state-run Korea Exchange operates the main bourse. Splitting up the KOSDAQ would break down the entry barrier to turn it into a hub for venture companies. It also means it may be operated by a new private entity in Seoul.

“President Park Geun-hye promised to nurture Busan into a financial hub and to boost the international competitiveness of its capital market,” local civic groups said in a joint statement on Tuesday.

“The attempt to separate the KOSDAQ market (from the Korea Exchange headquarters in Busan) runs directly counter to her previous pledges, as well as to the government initiative of pursuing balanced regional growth.”

The backlash came in response to earlier reports that the Ministry of Strategy and Finance tentatively included the separation plan in its three-year economic development blueprint, to be announced next week.

But ministry officials declined to comment, as the issue is only “under discussion.”

The government believes once the KOSDAQ is separated, it would help financially struggling venture firms raise capital more easily. Currently, the market has lost many of its prospering small and mid-sized members.

Busan, however, is not buying the idea. Members of the city’s financial industry refuse to accept such a separation, especially after the government failed to deliver on the promise to create a shipping financing company in the region.

“The idea is yet another act of fraud against Busan citizens and the government should immediately give it up,” the civic groups said.

The KRX, on the other hand, is maintaining its silence on the issue, apparently leaving the decision to the ministry. It hinted uneasiness over releasing KOSDAQ, however.

“In 2005, KOSDAQ was incorporated in the KRX, in line with the global trend of financial integration,” said a KRX official. “Separating the sector once again could be a retrogressive measure, with few benefits.”

KRX is targeting at listing 70 new companies in the KOSDAQ list this year, gesturing to further boost the sector under its wing.

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