The Securities and Exchange Act governs all aspects of securities trading and exchange operations.

Secondary trading is through Korea Securities Dealers Association (KSDA) over-the-counter (OTC) market or the Korea Exchange (KRX) submarkets – the interdealer market (IDM) and the general bond market (GBM).

Over the Counter Market

OTC trading is self-regulated and operates under KSDA guidelines. All types of bonds can be traded on the OTC market, regardless of whether they are listed on KRX. Price and unit volume, for example, are normally negotiated between sellers and buyers, and allowed any time of the day. Institutional investors -- such as banks, securities companies, investment trust companies, insurance companies, and pension funds -- are allowed to trade on the OTC market with no membership requirements. KSDA disclosure requirements are listed at the link below.

Korea Exchange

IDM is a wholesale market where authorized dealers trade government bonds among each other. The GBM is a retail market where individual investors trade all types of fixed-income securities -- including convertible bonds. IDM and GBM offer competitive trades in listed bonds. While, in principle, only securities companies are allowed to participate in the KRX market, access to IDM is open to both banks and securities companies irrespective of KRX membership, as long as they are licensed as government bond dealers by the Financial Supervisory Commission. Further information on IDM and GBM are provided at the KRX link below.
Trading, listing, and disclosure regulations of exchange market are at the link below. All bonds must meet listing requirements except government and public bonds.

Korea Exchange – Futures Market Division

Foreign investors must designate custodian banks (“standing proxy”) by custodian bank agreement and standing proxy agreement to trade futures and options contracts listed on KRX. Investment procedures on Korea's Futures Market are at the link below.