In an attempt to better regulate its gold market, South Korea said Wednesday it will open a gold exchange inside its main bourse in January 2012.

In a statement, South Korea's Ministry of Strategy and Finance said it has decided to set up a spot exchange market inside the Korea Exchange (KRX) to minimize operating costs.

South Korea is also considering separating the gold exchange from the KRX and making it into a specialized spot trade market that handles other commodities such as crude oil, refined petroleum and farm product, if its size expands.

Once it is set up, the ministry will work in close cooperation with the Financial Services Commission, the knowledge economy ministry and the National Tax Service to oversee the gold exchange.

It is estimated that South Korea's gold trading volume reaches 150 tons worth 5 trillion won ($4.2 billion ) on an annual basis.