Securities Industry Gradually Opens 'Fractional Trading of Overseas Stocks'

Hanwha Investment & Shinhan Followed by Samsung & KB... 20 Securities Firms to Offer Services Next Year
Competition to Attract Investors with Zero Fees and Investment Support Events

[Asia Economy Reporter Park Jihwan] Securities firms are increasingly joining the fractional trading service market for overseas stocks. Following the recent entry of Samsung Securities and KB Securities, NH Investment & Securities, Daishin Securities, and KTB Investment & Securities are also expected to launch related services within this year. The securities industry is actively competing to attract investors by offering various benefits such as zero commission fees and investment support funds.

According to the financial investment industry on the 7th, currently, four securities firms?Korea Investment & Securities, Shinhan Investment Corp., Samsung Securities, and KB Securities?offer fractional trading of overseas stocks. On the 12th of last month, the Financial Services Commission designated fractional trading services for overseas stocks, including exchange-traded funds (ETFs), provided by 20 securities firms, including Shinhan Investment Corp. and Korea Investment & Securities, which had already offered fractional trading, as innovative financial services. Samsung Securities launched its fractional trading service for overseas stocks on the 29th of last month, and KB Securities joined the market the day before yesterday. By the first half of next year, 20 securities firms are expected to sequentially introduce fractional trading services for overseas stocks.

Fractional trading of overseas stocks is a system where investors place orders in fractional units, and securities firms aggregate these orders to submit trading orders in whole shares. For example, to buy one share of Tesla currently priced at $1,008, approximately 1.19 million KRW is required, but with fractional trading, investors can purchase as little as 0.1 shares of Tesla. This allows investors to buy expensive overseas blue-chip stocks in fractional amounts according to their desired investment size, such as 10,000 KRW or 50,000 KRW.

Recently, the scale of overseas stock investments by domestic investors has shown a steep increase. According to the Korea Securities Depository, the amount of foreign currency securities held surpassed $100 billion (118.2 trillion KRW) for the first time at the end of last month. This is double the amount from 1 year and 5 months ago when it exceeded $50 billion (59.1 trillion KRW) in June last year. This is why securities firms are particularly focused on providing services for so-called "Seohak Ants," investors who invest in overseas stocks.

Securities firms are actively holding various events offering investment support funds and zero commission fees to attract new small investors in overseas stocks. KB Securities is giving away one overseas fractional stock (ranging from a minimum of 5,000 KRW to a maximum of 1 million KRW) randomly to the first 100,000 individual investors who purchase overseas fractional stocks worth more than 5,000 KRW by the 31st of this month. Until February next year, zero commission fees will be applied automatically for fractional purchases of overseas stocks up to 100,000 KRW per stock per day without any separate application.

Korea Investment & Securities offers zero commission fees for up to 10 orders per month for customers placing orders of 10,000 KRW or less until the end of the year. Samsung Securities is currently running an "Overseas Stock Fractional Investment Service Opening Commemoration Event," providing an investment support fund of $2 to the first 150,000 individual customers who sign up for fractional stock trading by the end of this month. An industry insider said, "The commission fee for fractional trading of overseas stocks is relatively high at 0.25% of the transaction amount," adding, "Since the zero commission fee periods and 60-90% preferential exchange rates vary by securities firm, it is necessary to carefully compare them."