Brokers Raise CMA Interest Rates
By Park Hyong-ki
Staff Reporter
Following the central bank's key interest rate hike last week, securities companies are raising interest rates on cash management accounts (CMAs) to about 5 percent on average.
Woori Investment & Securities and Tongyang Investment Bank increased their CMA interest rates to 5.1 and 5.2 percent, respectively, the highest rate among brokerage houses.
Mirae Asset Securities is offering an interest rate of 4.7 percent on stock deposit accounts, and Hyundai Securities, Hanwha Securities, Daishin Securities, Good Morning Shinhan Securities and Shinyoung Securities also increased their rates to the same level.
The jump is in line with efforts to compete with commercial banks, which have also raised their interest rates on deposits to contain the exodus of accountholders to brokerage houses' CMAs.
CMAs at securities companies offer higher interest rates than banks.
The average deposit rates at banks have risen by 0.66 percentage points in the first six months of this year, according to the Bank of Korea.
CMA interest rates used to range between 3.5 percent to 4.5 percent, far higher than the less than 1 percent offered by banks for their short-term demand deposit accounts.
Stock accounts have been increasingly drawing attention from mostly salaried workers as they can receive their salaries and make stock investments through the accounts.
The outstanding balance of cash management accounts at securities companies reached 19.4 trillion won as of the end of June, nearly 13 times higher compared with 18 months ago, according to the Financial Supervisory Service.
With the Capital Market Consolidation Act to take effect in 2009, analysts say many more will shift their accounts from bank deposits to CMAs as the act will allow brokerage houses to provide ``direct'' retail payment services for customers.