Canada Classified KRX As A Designated Stock Exchange

The Canadian Ministry of Finance notified the Korea Exchange (KRX) that it classified the KRX’s KOSPI and KOSDAQ markets as the Designated Stock Exchange* (effective on October 31, 2014)

* 44 exchanges from 31 nations including USA and Britain are classified as the Designated Stock Exchange by the Canadian Ministry of Finance as of November 3, 2014.

If an exchange is classified into the Designated Stock Exchange, listed securities of the exchange can be included into the retirement pension and qualified for various tax benefits under the Canadian tax law.*

* Listed securities on the Designated Stock Exchange are qualified for the inclusion into various registered pension plans, reduction of tax base on capital gains of donated securities to a charity, and capital gains tax-free when a non-resident disposes of the pertinent stock.

The Portfolio Management Association of Canada (PMAC)* requested the Ministry of Finance to classify the KRX into the Designated Stock Exchange on January 10, 2014, and the Ministry of Finance approved it.

* PMAC (Portfolio Management Association of Canada) is an association for asset management and investment business representing more than 180 Canadian investment and management companies.

In response to its member companies’ requests for classifying the KRX into Designated Stock Exchange, the PMAC conducted an initial assessment, judged its adequacy and requested the Ministry of Finance to evaluate.

In this regard, the Ministry of Finance evaluated 10 items including governance, ownership, trading system, Infrastructure, liquidity indicators and regulatory system of the KRX, and judged KRX to be adequate.

New trading demand is expected along with the increase of Korean stock portfolio by Canadian institutional investors including pension and fund.