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Sep 13, 2021
- FSC Plans to Make Fractional Trading of Domestic and Foreign Stocks More Widely Available
- The FSC announced its plans to make fractional trading of both domestic and foreign stocks more widely available to help improve access and convenience for investors. Background In 2019, the FSC allowed fractional trading of foreign stocks offered by Shinhan Investment and Korea Investment Securities by designating them as innovative financial services to be granted regulatory exemptions under its financial regulatory sandbox program. As a result, by the end of June 2021, the number of fractional stock traders at Shinhan Investment and Korea Investment Securities reached about 140,000 and 510,000, respectively, with their investment amounts standing at KRW270 million and KRW750 million each. However, fractional trading of domestic stocks remained unavailable due to the principle of indivisibility of shares as well as the non-fractional share-based design with which the domestic securities trading and depository infrastructures was set up. To help improve investor access and convenience, the FSC plans to make improvements to the current fractional trading system and make fractional trading of both domestic and foreign stocks available. Key Details Unlike the current system where individual securities firms have to apply for regulatory exemptions to provide fractional trading services, the new system will be based on a special infrastructure set up at Korea Securities Depository (KSD) that is dedicated to fractional trading and can be accessed and used by any securities firms that wish to offer fractional trading services to their customers. This will strengthen the safety and convenience of fractional trading in both domestic and foreign stocks. (Foreign Stocks) Stock trading in fractional shares of foreign stocks will be directly recorded in the securities firms account books. KSD will maintain separate account books on fraction trades and regularly check their consistency with those of securities firms. Investors will be able to trade in fractional shares of foreig
