Hello, I am Jun Ji-hye, a reporter at The Korea Times. I primarily cover financial authorities and write articles on a wide range of topics related to finance and capital markets. If you have any information to share, feel free to email me at jjh@koreatimes.co.kr, and I will review it carefully. I am committed to always doing my best to communicate with readers through high-quality articles.
Omnibus account reforms spur foreign retail inflows, boost KOSPI rally
A screen at the dealing room of Hana Bank in Seoul shows the closing prices of the KOSPI, Samsung Electronics and SK hynix, Monday. The KOSPI surged 338.12 points, or 5.12 percent, to close at 6,936.99, breaking above the 6,900 mark for the first time, driven by a rally in semiconductor stocks. Yonhap
By Jun Ji-hye
Regulator to replace foreign customers’ personal data with encrypted IDs for easier market access
Improvements to the omnibus account system for foreign investors earlier this year led to a rise in foreign retail inflows into Korea’s stock market, supporting the KOSPI’s recent upward momentum, market experts said Tuesday.
Korea introduced the omnibus account system in 2017 to facilitate foreign investors' trading of Korea-listed stocks. However, its adoption remained limited due to stringent eligibility criteria and unclear guidelines. To address this, the Financial Services Commission revised the relevant rules earlier this year, scrapping restrictions on account eligibility. The change allows overseas investors to trade Korean stocks directly through offshore brokers without opening separate accounts with local securities firms, significantly improving market access.
“Foreign investors, who had been attracted to Korea’s strong semiconductor earnings and relatively low valuations, previously gained exposure mainly through exchange-traded funds. However, the easing of omnibus account regulations has paved the way for direct inflows of foreign retail capital,” said Kang Jin-hyuk, an analyst at Shinhan Securities.
While the KOSPI’s rally this year has been driven primarily by abundant global liquidity and improved earnings in semiconductors and other key industries, experts underscored that the regulatory changes facilitating foreign inflows have also contributed to the upward momentum.
On Monday, the index jumped more than 5 percent, driven by robust foreign inflows, to close above 6,900 for the first time, edging closer to the 7,000 milestone.
Foreign investors snapped up about 3 trillion won ($2 billion) worth of shares on the main bourse, or about 3.9 trillion won when including the alternative trading platform Nextrade, with purchases concentrated in Samsung Electronics and SK hynix. This marks the largest combined net buying on record.
In line with the KOSPI surge, shares of Samsung Securities also rose by nearly 30 percent, supported by its new linkage service with Interactive Brokers (IBKR), which has opened a test channel for U.S. investors to directly access Korean equities.
Lee Jae-won, an analyst at Yuanta Securities Korea, a unit of Taiwan’s Yuanta Financial, said, “The introduction of IBKR-linked services, which provide a direct route for foreign retail investors to purchase Korean equities, is likely to boost trading turnover and act as a growth driver for brokerage earnings.”
In another bid to further improve foreign investors’ market access, financial authorities have revised guidelines to replace sensitive personal information with encrypted identification numbers.
Under the updated rules finalized on April 30, foreign investors no longer need to submit details such as names and passport numbers, and instead will use encrypted IDs.
The measure comes as a number of foreign investors have reportedly expressed discomfort with the requirement for brokerages to submit quarterly reports to the Financial Supervisory Service (FSS) detailing the trading activities of end investors using omnibus foreign accounts. Concerns have largely centered on the fact that such reports inevitably involve the disclosure of sensitive personal information.
To address the issue, financial authorities opted to maintain the reporting requirement while replacing personal data with encrypted identifiers.
“Taking into account the various concerns raised, we have made reasonable adjustments to the system within an acceptable range,” an FSS official said.
However, authorities added that if unusual trading patterns are detected under a specific investor identification number and additional verification is required, brokerages will be obligated to provide the investor’s name and other information.