Securities Firms' Foreign Currency Deposits Hit Record High... Annual Commission Income Tops 2 Trillion Won [Click eStock]

The Golden Age of Seohak Ants: Investors Eye Buying Opportunities Despite Slowing Trades
Overseas Commissions Now Account for 40% of Total Brokerage Fees
Kiwoom Leads in Trading Volume, Toss Ranks Second
Securities Firms Enter Currency Exchange Business; Currency Exchange Fee Revenue Set to Rise

Foreign currency deposits held at securities firms, which represent the funds individual Korean investors known as "Seohak Ants" set aside for overseas stock purchases, have surpassed 11 trillion won, marking an all-time high. Alongside this, annual overseas stock trading commissions at securities firms have also climbed into the 2 trillion won range.

According to Korea Securities Finance Corporation on September 4, foreign currency deposits held by domestic securities firms totaled 11.4229 trillion won as of the end of the second quarter. This is the largest amount ever recorded since statistics began. Although trading volume has been declining since peaking in the fourth quarter of last year, these standby funds have remained at a high level without significant withdrawals. This indicates that individual investors are staying in the market and continuing to look for buying opportunities.

The share of overseas stock commissions within total brokerage commission income at securities firms has also steadily increased. From the fourth quarter of last year through the first quarter of this year, overseas commission income exceeded 500 billion won each quarter. Among the five major securities firms-Kiwoom Securities, Korea Investment & Securities, NH Investment & Securities, Mirae Asset Securities, and Samsung Securities-the proportion of overseas commissions within total brokerage commissions rose to 40.2%. As a result, the scale of overseas commission income has surged. While it was about 1.46 trillion won last year, it is expected to surpass 2 trillion won annually this year.

Kiwoom Securities ranked first in overseas stock trading volume, reaching 116 trillion won in the first quarter alone and continuing to grow. Toss Securities ranked second with 90 trillion won. Although Toss Securities took the top spot for the first time with 113 trillion won in the fourth quarter of last year, Kiwoom Securities has reclaimed its lead. Meritz Securities saw its trading volume increase nearly fourfold, from 6.9 trillion won in the fourth quarter of last year to 31.8 trillion won in the first quarter of this year, driven by the launch of its "Super 365 Account," which offers both trading and currency exchange free of charge.

In terms of commission income, Mirae Asset Securities has consistently maintained the lead, as large firms with offline branches have an advantage in this area. However, Toss Securities, which operates without physical branches, has also remarkably held onto second place in commission income. As of the end of the first quarter this year, the average overseas stock commission rate at domestic securities firms stood at 6.4 basis points (bp), with 1 bp equal to 0.01%.

Leveraging their ample deposits, securities firms are entering the general foreign currency exchange business. In 2023, the Ministry of Economy and Finance revised the Foreign Exchange Transactions Regulations to allow securities firms with comprehensive investment business licenses to provide general currency exchange services to both individuals and corporations. Currently, five firms-Kiwoom Securities, Shinhan Investment & Securities, Samsung Securities, NH Investment & Securities, and Mirae Asset Securities-have obtained licenses. Kiwoom Securities was the first to launch a personal currency exchange service that allows clients to withdraw foreign currency deposits as cash.

As securities firms expand into foreign currency exchange operations, their service offerings are expected to further broaden to include travel cards, overseas remittances, and more. Park Hyejin, a researcher at Daishin Securities, explained, "The average daily overseas stock trading volume, which was only 170 billion won in 2019, grew more than twentyfold to about 3.6 trillion won as of July this year. Not only trading commissions, but also currency exchange fees, will become stable sources of income for securities firms."

This content was produced with the assistance of AI translation services.