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Hana Securities granted regulatory exemption for foreign investors’ direct stock trading
Hana Securities' headquarters in Seoul / Courtesy of Hana Securities
By Jun Ji-hye
Hana Securities has been granted a regulatory exemption allowing nonresident foreign investors to directly invest in Korean stocks through overseas securities firms, the company said Thursday.
This exemption enables foreign investors to open accounts with domestic securities firms at overseas brokerage branches.
Starting with this initiative, financial authorities in Korea plan to gradually improve regulations to enhance foreign investors’ access to the domestic stock market.
Hana Securities expects to roll out the new service after approximately two months of development.
Upon launch, foreign investors will be able to trade Korean stocks through accounts opened at Hong Kong-based Emperor Securities.
Additionally, the firm plans to expand the service to additional countries in the near future, as it is actively engaging with brokerage houses in Singapore, Taiwan and Japan that are interested in facilitating Korean stock investments.
The latest regulatory reform was initiated due to the lack of utilization of the foreign investor omnibus account system, which was introduced in 2017.
In response to increasing calls for further improvements, authorities have decided to ease the requirements for opening omnibus accounts to facilitate smoother stock investments by foreign investors.
The omnibus account system allows multiple foreign investors to trade through a single account. These accounts are registered under the names of financial investment firms.
Under previous regulations, only overseas securities firms that were affiliates or major shareholders of domestic financial investment companies could open foreign investor omnibus accounts. However, the revised rules will allow all overseas brokerage firms to establish such accounts.
“This new service will enhance nonresident foreign investors’ access to the Korean stock market, diversify the investor base and encourage greater inflows of new capital,” said an official from the Financial Services Commission, the country’s top financial regulator.
For its part, the Financial Supervisory Service noted that it will collaborate with the Korea Financial Investment Association to ensure foreign investors can seamlessly use omnibus accounts.
The financial watchdog added it plans to introduce guidelines outlining reporting systems, customer identification obligations and operational procedures for domestic securities firms providing foreign investor omnibus account services.