Kakao Pay Includes 'Stock Fractional Trading Approval Plan' in Securities Report Before Government Announcement

Kakao Pay Specifies Fractional Share Trading Method and Implementation Timing in Securities Report Submitted Last Month
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[Asia Economy Reporter Ji Yeon-jin] It has been confirmed that Kakao Pay included information related to the Financial Services Commission's plan to allow fractional trading of domestic and foreign stocks and its implementation timeline in the securities registration statement submitted last month. This means that more than ten days before the government policy was announced, related information had already been passed to stakeholders, and undisclosed policies that could affect the stock market were openly circulated.

According to the Financial Supervisory Service's electronic disclosure system on the 14th, Kakao Pay amended the securities registration statement submitted for listing on the KOSPI market on the 31st of last month, stating that part of the funds raised through the initial public offering (IPO) would be "used to build a system for fractional trading of Kakao Pay Securities' stocks."

Kakao Pay explained, "Under current regulations, there is no separate license or registration unit for fractional stock trading," and added, "Kakao Pay Securities currently holds an investment brokerage license and plans to proceed with enabling fractional stock trading services through designation as an innovative financial service."

Furthermore, it stated, "Kakao Pay Securities is in consultation with the Financial Services Commission, the Korea Financial Investment Association, and the Korea Securities Depository, and it is expected that around September 2021, if the Korea Securities Depository applies to the Financial Services Commission, innovative financial service designation for fractional trading of overseas stocks will be granted to securities firms including Kakao Pay Securities that wish to participate."

Additionally, Kakao Pay Securities expects to start overseas stock fractional trading services around December 2021 based on this innovative financial service designation, and domestic fractional stock trading is anticipated to be possible after about one year, considering the preparation period of related institutions such as the Korea Securities Depository.

This aligns exactly with the Financial Services Commission's 'Plan to Allow Fractional Trading of Domestic and Foreign Stocks' announced on the 12th. The Financial Services Commission announced that if the Korea Securities Depository receives applications for innovative financial service designation together with securities firms around October to November this year, overseas stock services could start within this year, and domestic stock services could begin in the third or fourth quarter of next year.

Although the Financial Services Commission announced a policy to expand fractional stock trading in August last year, specific details or timelines had not been finalized until last month. Industry insiders had speculated that the expansion of fractional trading might be uncertain within this year. On the 5th of last month, the Financial Services Commission held a closed meeting on the introduction of fractional trading with capital market experts at an undisclosed location in Seoul, but securities firm representatives did not participate in this meeting.

Another media outlet predicted the introduction of domestic fractional stock trading next year on the 31st, when Kakao Pay submitted the amended securities registration statement. At that time, a financial authority official said, "We are looking for related measures through the Korea Securities Depository to enable fractional units not only for overseas stocks but also for domestic stocks, and specific details will be announced soon," but avoided giving a concrete answer regarding the implementation timeline.

A Kakao Pay official said, "We had a rough idea of the direction because we have been continuously communicating with the Financial Services Commission regarding fractional stock trading." A Financial Services Commission official stated, "This plan was created in consultation with the Korea Securities Depository, the Korea Financial Investment Association, and the industry, and the implementation timeline reflects the preparation schedules of the industry and the Korea Securities Depository," adding, "We were cautioned not to discuss matters under government consultation outside before the official announcement."