Rate could be cut by more than 10 percent to benefit retail investors


Korea’s bourse operator and other securities-related agencies said Monday they plan to slash the trading fees they charge for brokerages, a move that will lead to lower commissions that retail investors pay.

The Korea Exchange, the Korea Securities Depository and other organizations are considering a cut of more than 10 percent in fees applied to local securities houses and futures firms.

The move is expected to help reduce the costs retail investors have to bear, which will in turn encourage more trades thanks to lower transaction costs.

The overhaul of the current trading fee system is tentatively planned for the second quarter of this year, at the earliest.

Retail investors here have long claimed that the transaction fees are generally too high, cutting deeply into their overall investment costs. The beneficiaries of such still-high fees are the stock exchange providers.

The concession by the KRX and other agencies concerning the transaction fees came after the Board of Audit and Inspection threatened to issue a formal warning against those organizations unless the current trading fee systems are reformed.

Financial Services Commission Chairman Kim Seok-dong voiced his concern over whether the trading fees are too high.

In response to the mounting pressure, the KRX and the KSD plan to hold a public forum about the new trading fees in the near future to collect public views on the issue.

Under the current system, brokerages pay a commission that goes up in accordance with the amount of money changing hands. The rate system tends to bring sizable income to the KRX and the KSD, and the financial regulators want to put an annual cap on such income stemming from the trading fees.

The auditing agency recently discussed the problem with the trading fees with the FSC because retail investors were forced to pay more commissions even after the fees were cut in January 2010.

By Yang Sung-jin (insight@heraldcorp.com)