Seoul, May 9
South Korean brokerages are seeking partnerships and expanding infrastructure for foreign omnibus accounts to attract more foreign investors, who have been instrumental in fuelling the recent tech rally that pushed the country's benchmark index to unprecedented levels.
According to financial sources on Saturday, Samsung Securities Co., a major domestic brokerage, has recently partnered with Interactive Brokers LLC. (IBKR), a global online brokerage platform, and started a pilot service of its foreign omnibus accounts in the United States.
The collaboration will allow international investors using IBKR to trade Korea-listed stocks directly through Samsung Securities' infrastructure, market insiders said, reports Yonhap news agency.
Samsung Securities is not the only major domestic brokerage to start such a service. The country's major retail broker Kiwoom Securities Corp. inked a similar partnership with Webull Corp., a U.S.-based broker-dealer.
Mirae Asset Securities Co., one of the largest brokerages in the country, also has finalised internal preparation to introduce such accounts and is contacting global clients with the goal to launch it in the first half.
"We are currently contacting global brokerages and our overseas offices regarding the matter, while in-depth negotiations with brokerages in Asia and the U.S. are under way," an official from the securities firm said.
Local online-only brokerage Toss Securities, too, said it is reviewing the launch of such accounts, without further elaborating. The brokerage's parent company, Viva Republica, is pursuing an initial public offering in the U.S. market this year.
A total of seven local brokers are preparing to start omnibus account services, according to the Financial Services Commission (FSC).
Omnibus accounts allow nonresident investors to trade South Korean equities directly through the brokerages they use to trade stocks in their home markets.
The system was first introduced in 2017 to ease foreigner access to the domestic market, but the accounts have been barely used, as local financial regulators limited the opening of such accounts to only a handful of entities.
The FSC, however, abolished such a limitation in January under the government's "comprehensive road map" aimed at securing South Korea's upgrade to developed-market status from Morgan Stanley Capital International.
Market watchers were widely positive of the introduction of omnibus accounts, saying it will help attract more overseas capital into the local market.
"Foreign omnibus accounts will mark the beginning of the advance of the K-stock market and will provide an opportunity to expand global liquidity into the local market," analyst Yoon Yoo-dong said in a report.
More trading could lead to more commission earnings that can benefit local brokerages, she added.
Recent movements of local brokerage stocks appear to suggest that there is a market consensus for such an outlook.
Samsung Securities vaulted over 28 percent on Monday amid reports of the securities firm's partnership with IBKR. Shares of Kiwoom Securities rose by more than 14 percent in a single trading day in the same week.
- IANS
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