Retail investors turn away from Kiwoom after trading system failure

A man passes by Kiwoom Securities headquarters in Seoul in this May 24, 2023 photo. Newsis

Investor frustration is growing as Kiwoom Securities has yet to present clear measures to prevent the recurrence of system errors that occurred over two consecutive days last week during a sharp decline in the domestic stock market.

Some investors have even expressed their intentions to switch to other brokerages.

Kiwoom Securities experienced system errors on Thursday during the first hour after the market opened — typically the busiest trading period — which delayed the execution of buy and sell orders. The issue was resolved about an hour later after causing significant inconvenience for many users.

The disruption coincided with the U.S. announcement of new "reciprocal" tariffs, sending global markets into turmoil. On the brokerage’s website, clients expressed outrage over missed opportunities to act.

The following day, Friday, just ahead of the Constitutional Court’s ruling on former President Yoon Suk Yeol’s impeachment case, similar issues resurfaced.

Login failures, order placement delays and trade execution errors began at market open and persisted for about an hour and a half.

Even after a recovery notice was posted, the system faced additional disruptions as a surge of orders flooded in during the impeachment ruling.

According to Kiwoom Securities, the system errors were caused by a bottleneck in the access servers due to a surge in order volumes.

Among investors, the first 30 to 60 minutes after the market opens is widely regarded as the most critical period, when trading volumes typically surge.

The timing of the latest system failures was particularly disruptive, as they took place during significant market-moving developments — the announcement of U.S. tariffs and the court’s decision on Yoon’s impeachment.

Consequently, many investors expressed deep frustration over missing key opportunities to react to critical news, whether to lock in profits or limit losses.

“In moments where every second counts, if the system crashes, we are the ones left paying the price,” one investor wrote on the firm’s website.

Another user wrote, “This isn’t the first time. I have completely lost trust in them.”

In response, the brokerage house said it would compensate investors who can prove they suffered losses due to the system errors.

“We are currently receiving claims from clients who incurred actual losses. We plan to contact them as quickly as possible to proceed with compensation,” a company official said.

The firm stressed that it had completed a full inspection of its IT systems over the weekend and confirmed that no issues remain.

However, concerns remain that similar problems could recur, especially given the current market environment where trading orders can surge in a short period of time.

Lee Bok-hyun, left, governor of the Financial Supervisory Service, and Jeong Eun-bo, CEO of Korea Exchange, observe a demonstration of the illegal short selling detection system during a showcase event at the exchange in Seoul, March 19. Joint Press Corps

The Financial Supervisory Service (FSS), the country’s financial watchdog, is also closely monitoring the situation.

“We will determine whether to launch an inspection after identifying the cause of the system failure and assessing whether any regulations were violated,” an FSS official said, adding that no formal investigation has been initiated at this point.

During his participation in the financial supervisory advisory committee meeting on Monday, FSS Gov. Lee Bok-hyun said, “Disruptions in IT systems can damage market trust. We aim to strengthen the digital environment to ensure greater safety and reliability.”

The FSS is currently conducting an inspection of the Korea Exchange, which came under scrutiny last month after a system failure halted KOSPI trading for seven minutes. The inspection began on March 25.