By Yi Whan-woo
HanMag Securities is adding to the woes of other brokerage houses that are already suffering from a sluggish performance as they will have to bear the firm's loss worth 46 billion won incurred by an ordering mistake last Thursday.
HanMag suffered the unexpected loss by exercising its call and put options exceptionally higher or lower than market prices on the KOSPI200 index market, Thursday morning.
The small-scale securities company specializing in futures was required to make settlements worth 57.06 billion ($54.23 million) by the deadline of 4 p.m. Friday but failed to make the payment leaving the Korea Exchange (KRX) to pay instead. HanMag has only 20 billion won in equity capital.
The KRX, the country's sole exchange operator, used the reserves set aside by its 60 member companies for emergency settlements. HanMag will be responsible to make up the amount, but the KRX's other 59 members, all of them brokerage houses, are likely to bear the burden since it is liable to default and file for bankruptcy, according to industry sources.
"It will be inevitable for our member companies to make up the amount in the reserves if HanMag goes down," a KRX spokesman said.
He added the members companies are required to have 200 billion won in reserves.
"The agreement was made to ensure investors receive their money from trading regardless of any circumstances," he said. "And our members will be required to make sure that they maintain the amount."
The members include the country's five biggest brokerage houses ㅡ Samsung Securities, Hyundai Securities, KDB Daewoo Securities, Woori Investment & Securities and Korea Investment & Securities ㅡ that suffered earning shocks in the July-September period.
Meanwhile, HanMag Securities asked 120 of its 157 employees to quit voluntarily Tuesday.
"It is an appropriate measure considering we face a risk in our business activities," a HanMag Securities spokesman said.
According to the Financial Supervisory Service (FSS), the firm's debt stood at 120.27 billion won as of March, while its total assets were 140.57 billion won.
An option is a contract which gives the buyer the right to buy or sell an underlying asset or instrument at a specified strike price on or before a specified date. A call option is the right to buy, while a put option is the right to sell.
HanMag Securities is adding to the woes of other brokerage houses that are already suffering from a sluggish performance as they will have to bear the firm's loss worth 46 billion won incurred by an ordering mistake last Thursday.
HanMag suffered the unexpected loss by exercising its call and put options exceptionally higher or lower than market prices on the KOSPI200 index market, Thursday morning.
The small-scale securities company specializing in futures was required to make settlements worth 57.06 billion ($54.23 million) by the deadline of 4 p.m. Friday but failed to make the payment leaving the Korea Exchange (KRX) to pay instead. HanMag has only 20 billion won in equity capital.
The KRX, the country's sole exchange operator, used the reserves set aside by its 60 member companies for emergency settlements. HanMag will be responsible to make up the amount, but the KRX's other 59 members, all of them brokerage houses, are likely to bear the burden since it is liable to default and file for bankruptcy, according to industry sources.
"It will be inevitable for our member companies to make up the amount in the reserves if HanMag goes down," a KRX spokesman said.
He added the members companies are required to have 200 billion won in reserves.
"The agreement was made to ensure investors receive their money from trading regardless of any circumstances," he said. "And our members will be required to make sure that they maintain the amount."
The members include the country's five biggest brokerage houses ㅡ Samsung Securities, Hyundai Securities, KDB Daewoo Securities, Woori Investment & Securities and Korea Investment & Securities ㅡ that suffered earning shocks in the July-September period.
Meanwhile, HanMag Securities asked 120 of its 157 employees to quit voluntarily Tuesday.
"It is an appropriate measure considering we face a risk in our business activities," a HanMag Securities spokesman said.
According to the Financial Supervisory Service (FSS), the firm's debt stood at 120.27 billion won as of March, while its total assets were 140.57 billion won.
An option is a contract which gives the buyer the right to buy or sell an underlying asset or instrument at a specified strike price on or before a specified date. A call option is the right to buy, while a put option is the right to sell.
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