Securities Industry, Deposit Utilization Fee Rates Increasing One After Another

Samsung, KB, and Others Join In

Since the establishment of the Model Code for Rationalizing the Utilization Fee Rates on Customer Deposits by Securities Firms, the securities industry has been collectively raising the utilization fee rates on deposits.

According to the financial investment industry on the 26th, Samsung Securities will raise the utilization fee rate to 1.0% per annum, an increase of 0.6 percentage points, for customers with an average deposit balance of 500,000 KRW or more for three months (one quarter) starting from the 29th. KB Securities will also increase the utilization fee rate by 0.03 percentage points to 1.06% starting January next year, and Leading Investment & Securities has decided to raise the utilization fee rate by 1.0 percentage point for all customers regardless of the amount.

Yeouido Securities District, Park One, LG Twin Towers. Photo by Hyunmin Kim kimhyun81@

Earlier, Kiwoom Securities had increased the customer deposit utilization fee rate from 0.25% per annum to 1.05% per annum, an increase of 0.8 percentage points, starting October 8th before the establishment of the Model Code. Mirae Asset Securities also raised the rate by 1.9 percentage points for balances under 500,000 KRW and by 1.25 percentage points for balances between 500,000 KRW and 1,000,000 KRW starting from the 4th of this month.

Customer deposits entrusted to securities firms are fully entrusted or deposited with Korea Securities Finance Corporation, which invests these deposits and distributes the earnings to the securities firms. According to data submitted by the Financial Supervisory Service to the office of Assemblywoman Yang Jeong-sook of the National Assembly’s Political Affairs Committee, the total income earned by 30 domestic securities firms from customer deposits between 2019 and 2022 was 2.467 trillion KRW, while the interest paid to customers during this period was only 596.5 billion KRW.

As concerns were raised about the structure in which securities firms earn stable profits without bearing significant risk from deposit management, financial authorities launched a task force (TF) with the industry and began institutional improvements. Subsequently, the Korea Financial Investment Association completed the establishment of a Model Code that requires securities firms to calculate the utilization fee rate on deposits at least once per quarter to respond timely to market interest rate fluctuations.