Korea's first alternative stock trading platform fuels brokerage competition

By Lee Yeon-woo

Competition is heating up among domestic brokerage firms as they vie for retail funds ahead of the launch of Korea's first alternative trading system (ATS) next month, market watchers said Tuesday.

With market leader Mirae Asset Securities taking the first step by lowering domestic stock trading fees, other securities firms are expected to face pressure to reduce fees further.

Mirae Asset Securities said it will cut its domestic stock trading fees by 0.004 percentage point starting March 4. Following this decision, the company now offers one of the lowest trading fees for mobile trading platforms commonly used by retail investors.

This strategic move reflects expectations of increased capital inflows into the domestic stock market ahead of Nextrade's launch — the country’s first ATS — on March 4. Moreover, with Nextrade's transaction fees up to 40 percent lower than those of the Korea Exchange, securities firms have room to reduce their trading fees even further.

The fee-cutting competition among brokerage firms is expected to become more intense. Kiwoom Securities and Shinhan Securities are reportedly considering fee reductions as well.

"If investors shift accounts to minimize trading costs, they not only make transactions but also gain access to additional financial services. This naturally incentivizes securities firms to lower fees as they compete to attract more customers," an official at a domestic brokerage firm said.

This is not the first time securities firms have ramped up efforts to strengthen their retail business.

Last year, brokerage firms engaged in an intense fee-cutting battle to attract retail investors trading in overseas markets.

Meritz Securities led the way by waiving fees on foreign stock trades, prompting Mirae Asset Securities, Samsung Securities and Kiwoom Securities to launch their own zero-fee promotions soon after.

Financial regulators appear to welcome the ongoing fee competition in the industry. One official stated that the launch of the ATS is expected to stimulate further competition in the Korean brokerage market, bringing it in line with major global markets while expanding investment options for traders.