South Korea’s FSC Expands Availability of Fractional Trading

South Korea’s FSC has announced plans to reform its current fractional trading system and make fractional trading of both domestic and foreign stocks available as part of plans to expand the options available to local investors.

Individual securities firms will no longer have to apply for regulatory exemptions to provide fractional trading services, but instead will be able to access a new platform set up at Korea Securities Depository (KSD) dedicated to fractional trading. 

Stock trading in fractional shares of foreign stocks will be directly recorded in the securities firms’ account books. KSD will maintain separate account books on fraction trades and regularly check consistency with those of securities firms. 

Investors will be able to trade in fractional shares of foreign stocks and collect dividends via domestic securities firms. The changes will need to be implemented with amendments to the Financial Investment Services and Capital Markets Act. 

Securities firms that are planning to offer fractional trading services will be able to apply for the designation of “innovative financial services” between October and November this year, the FSC said, to launch fractional trading services under the regulatory sandbox program before the legislative amendments take place. Firms are expected to be able to execute foreign stock trades and in Q3 2022 for domestic stocks.