SEOUL, Nov. 17 (Korea Bizwire) — South Korean stock investors will be allowed to trade foreign stocks in decimal points via the securities firms of their choice, starting from the end of this year at the earliest.
The Korea Securities Depository (KSD) announced that it had completed the setup of a special infrastructure to enable local securities firms to introduce the decimal point trading service for foreign stocks, following the Financial Services Commission (FSC)’s new designation of innovative financial services.
Thus far, only customers of Shinhan Investment Corp. and Korea Investment & Securities Co. were allowed to trade foreign stocks in decimal points since they were designated as innovative financial services in 2019.
Thanks to the FSC’s new designation, however, the number of brokerage houses that can offer such services will be extended to 20.
The newly-designated securities firms will introduce the decimal point trading service by the end of this year or within the first half of next year, depending on company circumstances.
Decimal point trading refers to a system in which brokerage firms gather fractional orders from investors to form a whole single share and record stock trades in fractional shares of foreign stocks in their account books.
For instance, if an investor places an order to buy 2.7 shares of Apple Inc., the securities firm making the purchase on their behalf should buy the remaining 0.3 share and ask the KSD to make settlement for three shares, including the 0.3 share bought by the company.
The KSD will set up a separate deposit account exclusively for decimal point trading in the depositor’s account book and manage such shares by the unit of one full share.
J. S. Shin (firstname.lastname@example.org)