Korean Stock Broker

[Cicero]

Starting a thread on how to invest in Korean stocks.

So far there seem to be two potential options: Monex Boom and OCBC Securities.

Have also reached out to several Korean stock brokers to see whether it is possible to open an account as a non-resident.

[writser]

Regarding Boom, I enquired there a few weeks ago about opening an account as a foreigner. This is what they told me:

[quote>

Our individual account opening procedures is simple.  You need to fill in an application form (cash / margin) and submit the below documents to us:

https://www.boom.com/en/open_account/

1)  Passport copy (certified true copy)
2)  Home address proof (ie. credit card / electricity bills within 3 months that shows the client's name and address) (copy)


You need to mail in the application and arrange a witness to certify your passport copy as well as the signature on your account application form.

The witness can be Justice of Peace, or professional (Bank Manager, Certified Accountant, Solicitor or Notary Public).   

Please note that U.S. citizens / residents will not be eligible for trading in the U.S. market.   


Please mail the originally signed application and other documents to our office by post:

Customer Services Dept.
Monex Boom Securities (H.K.) Limited
Room 2501, 25/F., AIA Tower
183 Electric Road
North Point
Hong Kong


After your BOOM account is set up, you can transfer funds directly from your bank account in your personal name in overseas via telegraphic funds transfer to one of our bank accounts in Hong Kong (HSBC / Hang Seng Bank / Standard Chartered Bank / Bank of China (HK) Limited):

https://www.boom.com/en/customer_service/funds_management/

That seems very doable. I live in Europe - not sure if the same applies to US residents who want to open an account.

[writser]

I also looked a bit into OCBC but that seems to be an inferior option to me. First of all, it seems that setting up an account requires a bit more documentation ( https://portal.iocbc.com/accounts/basic-securities-trading-account#apply-online-basic-trading ) which could be a hassle. Note that I haven't really tried to do so, so maybe requirement 3:

[quote>

Bank statement from a Monetary Authority of Singapore (MAS) licensed bank
Latest CPF statement
Latest Notice of tax assessment from IRAS

can be sidestepped, but it might be difficult to produce these documents.

On top of that, far more annoying if I am correct, OCBC offers only trading by phone for Korea: https://portal.iocbc.com/platforms/global-market-access.page . I hate placing orders by phone. It's expensive, error-prone and I find it very annoying to talk English over the phone when both speakers are non-native speakers and have their own mangled accent.

Phillip Capital / Securities: same thing: expensive, only over-the-phone trading. That seems like the least favorable option.

According to this list: https://the-international-investor.com/comparison-tables#findstockbrokers Swissquote would also work, which could be a simple alternative. Haven't tried that one yet - if I remember correctly somebody here said it wasn't actually possible in practice.

[Genyi]

It's maybe good to mention that this threat spawns from the discussion topic Nice Information & Technology where we went off-topic discussing broker issues. Starting here: https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/nice-it/msg455532/#msg455532

As discussed there, there is another important concern besides platform ease-of-use and trading costs. That is the safety of your holdings when a broker outside of Korea (like Boom) uses a broker inside Korea to process and register your Korean trades. What would happen with clients' stock holdings and cash balances if one of those brokers would default and cease operations.

[Genyi]

Interactive Brokers has a Features Poll where users can suggest new products and functionality and other users can support the suggestion (or not) with their vote. Recently someone suggested to add access to the South Korean Stock Exchange.

https://www.interactivebrokers.com/en/index.php?f=2493&sid=15782

It looks like the admins didn't even let the voting start, but set the status to Scheduled right away.

Note that Interactive Brokers already provides access to Korean Futures. This looks a promising sign of more to come.

[RetroRanger]

"Or does the HK regulator only enforce that for HK/Shanghai/Shenzhen stocks?"

The seperation of Korea stocks , that is a good question. I could refresh my answer to Boom to find out if they also do that with foreign stocks. In terms of reading / my understanding , they seem to do that.

About Swissquote , which would be my number 1 option due to security, the page seem to deliver false information. I contacted them via mail and phone ( order hotline ) and they told me they have no mechanic for ordering korean stocks. Neither online or by phone.
That would be the ultimate ( even if it was a bit more expensive ) choice.

I agree that Boom would be the least hassle but i simply dont trust the securities! ALSO please keep in mind, that in the worst case scenario you would need to locally travel to HK to solve problems or fight for your issues. I dont see that (financially) realistic to me.

[udravi]

Regarding Boom, I enquired there a few weeks ago about opening an account as a foreigner. This is what they told me:

[quote>

Our individual account opening procedures is simple.  You need to fill in an application form (cash / margin) and submit the below documents to us:

https://www.boom.com/en/open_account/

1)  Passport copy (certified true copy)
2)  Home address proof (ie. credit card / electricity bills within 3 months that shows the client's name and address) (copy)


You need to mail in the application and arrange a witness to certify your passport copy as well as the signature on your account application form.

The witness can be Justice of Peace, or professional (Bank Manager, Certified Accountant, Solicitor or Notary Public).   

Please note that U.S. citizens / residents will not be eligible for trading in the U.S. market.   


Please mail the originally signed application and other documents to our office by post:

Customer Services Dept.
Monex Boom Securities (H.K.) Limited
Room 2501, 25/F., AIA Tower
183 Electric Road
North Point
Hong Kong


After your BOOM account is set up, you can transfer funds directly from your bank account in your personal name in overseas via telegraphic funds transfer to one of our bank accounts in Hong Kong (HSBC / Hang Seng Bank / Standard Chartered Bank / Bank of China (HK) Limited):

https://www.boom.com/en/customer_service/funds_management/

That seems very doable. I live in Europe - not sure if the same applies to US residents who want to open an account.

[RetroRanger]

Just wanted to Share the Last answer from Boom

 

Yes, it apply to Korea stock as well. Actually, all stocks and cash kept by BOOM on behalf of clients, they have to be in the segregated Trust account, if the client maintain a Cash account with us.

In case of Margin account, the margin agreement allow us to re-pledge client's securities as collateral with other financial institution.

 

So the risk lies in trusting those stuff and in the worst Case you have to travel to China/Korea and Fight on you own 

Edited April 3, 2021 by RetroRanger

[Cicero]

Few things I picked up:  

1. Hong Kong vs. Singapore: both jurisdictions have a compensation fund and they are very similar. Bottom line is that cap is pretty low ($40-70 K) and that it does not apply to foreign stocks

2. OCBC (Singapore) : seems to be very expensive 0.8% commission AND the FX is quite cumbersome. You need to FX from SGD and they don't tell you the spread they are using (only once the account is opened). Not sure it is worth opening an account with them; my sense is the FX spread is pretty wide. The upside here is that the broker is owned OCBC a large AA- rated bank.

3. Philip Securities (Singapore or HK): Seems the worst of all worlds. As expensive as OCBC but without the backing of a strong parent. Monex Boom seems like a safer and cheaper option. Emailed them some questions, but they never came back  

4. Samsung Securities: Broker in Korea. Intriguingly they have some of the forms on their website needed to open an account as a foreigner. Emailed them. Let see what comes back

5. KB Securities: Nothing on the website suggests you can open an account with them. No contact details either

6. Korea Investment and Securities: the broker Monex Boom uses as custodian. They have some information on how to invest in Korea as a foreigner on their website (domain is eng.truefriend.com !). So looks like they do this conceptually. Emailed them. Let's see

7. Monex Boom: they do seem fairly responsive to email requests. Monex the parent company is a fairly significant broker in Japan. Seems fairly solid if not the most conservative broker out there (significant footprint in crypto currencies)

8. Someone from Ebest reached out on the Nice Holdings thread. They seem to be able to accommodate foreigners. Let see where that discussion goes 
 

[Genyi]

Quote

3. Philip Securities (Singapore or HK): Seems the worst of all worlds. As expensive as OCBC but without the backing of a strong parent.

For Philip Securities Singapore, you may want to check this page: https://globalmarkets.poems.com.sg/markets-we-offer/south-korea-krx/

POEMS is the electronic platform of Philip. You need to call your Trade Representative personally to trade the Korean market. So, I guess you can only view your Korean shares on POEMS without being able to trade them online. Commission in this case is 0.40% but also note the custody charges of SGD 2.14 per month which can be avoided as a larger customer.

 

[Cicero]

Thank you. You are right. Philip Securities is lower than OCBC. I thought I had read 0.8%, perhaps misread something. Would still prefer Monex Boom over Philip as for the former you have a listed, sizable parent, financial statement (for the parent) and an idea who controls the company. In addition the commission is almost meaningless without knowing the FX. The mark-up on the spread is quite sizeable, bigger than the commission in some cases and much more opaque. 

 

It’s a shame. Philip does offer an interesting set of countries. Would be a great complement to IB. 

[RetroRanger]

No update here i guess? 

I mailed kowoonmo, no response

[Cicero]

OCBC never came back. None of the other Korean brokers responded. I am in touch with Kowoonmo, but it is quite a process! 

[Cicero]

Understand from Koowoonmo that a member of this board is a client of Koowoonmo who pointed him into the direction of the board (thank you!). If you read this can you message me? He seems very professional and I have nothing but good things to say so far, but would be great to validate with someone who has more experience with him. Thanks for your help!

[Cicero]

To close out the discussion on Korean stock brokers. None of the Korean stock brokers listed above got back to me. I did in the end open an account with eBest in Korea. Below some thoughts on my biased view on the pros and cons:

# Commissions: are as high as Monex Boom. There is a mark-up on the FX between KRW and USD. I am not sure that Monex Boom has such a mark-up, but I suspect they do. No other charges save for commissions and FX mark-up. Wiring money into Korea is about USD 20 per wire depending on the bank you are using of course. 

# Account opening: eBest do their best to make the process smooth, but it's not super easy. You will have to get a few documents certified and there are some forms to fill. It also takes a while, assume two weeks if things go fast. 

# Orders: only calling/ email works. Website is accessible but you have to submit order by voice/ email for technical reasons. 

# Security: Shares are held in your name with the central depository. ebest is listed in Korea and rated by Nice and Kis with a A2+ rating. There is a Korean version of deposit insurance that covers cash and securities up to about USD 50 k. The central depository has insurance as well, but it also has about USD 4 Trn in assets so if the depository fails, there are likely to be problems so grave in Korea that the insurance won't matter much. 

Is it worth it vs. Monex Boom? I sleep a bit better this way, but can understand if someone prefers Monex Boom. 

 

@RetroRanger Email him again, he is usually quite responsive. Maybe just overlooked the email. If you continue to struggle DM me, I can give you his telephone number. 

 

[RetroRanger]

Thank you for your insights I will try again  

@Cicero

do you know if the fees (yearly costs) will be substracted from the money you have deposited? I see a lot of details here are also important, in terms of handling of such stuff, to not risk some penalties happening. Because they cannot just get the money from your bank account like with us brokers

 

Edited April 21, 2021 by RetroRanger

[Cicero]

I have in writing from them that there are no fees except FX and commissions for buy or sell i.e. no fees for dividends, custody etc. So there should be no yearly costs. 

Was not entirely clear how they handle proxy votes and if they charge for that, but that is too an extent at my discretion, so did not worry about that too much.  

[RetroRanger]

Oh that is actually create to hear  Thank you for that update.

I am still "out" but just in terms of my personal risk levels. I just dont see myself sleeping well, having 20% of my portfolio in south korea, where if something happens i cannot react etc..  Also i am still uncomfortable , because in my terms, it was about NICE holdings, and i just find no complete understanding ( the IR page is NOT good, dead links etc .. ) 

But that does not mean, that will change and your information is very valuable

[Cicero]

Totally understand.

On the IR page: there are a few broken links, missing docs etc. However, if you contact the IR team they send you what you ask for directly via email. They tend to be fairly responsive. Often same day. Probably will not change your assessment, but thought I'd point out. 

[RetroRanger]

Yes yes I know , i have heard that the IR team is very responsive. But you know, why can such a company ( by the way in some terms TECH company) cannot fix their stuff right . If i contact them, they should also fix the website etc.. But offtopic

 

What i mean the combination of "money at a foreign bank" , "stock i dont understand fully" etc is personally not a thing i am currently comfortable with. That can grow with my investing life , but at the moment its a personal risk i dont want to take. BUT i am totally interested in this topic and the evolving off korean brokers.

Please keep us updated on this  

[dabuff]

Cicero thanks for sharing experience. Were you required to obtain a foreign investor ID to set up the brokerage account? Were there any account minimums? 

[Cicero]

Yes, I was required to obtain a foreign investor ID. Understand this to be a requirement with all brokers in Korea. You need to fill out a form, Ebest does the rest. Funny thing: the ID seems to be a running number, so looks like in total they issued 50,000 IDs over time. 

Ebest did not mention any account minimums, but I did tell them upfront what I wanted to fund the account with, so could be that it happened to be above and they never mentioned it. Would ask Koowoonmo. He is fairly responsive. 

[Genyi]

After taking a few steps back, I reconsidered our discussion above and earlier in the NICE Information & Technology thread. I drew my conclusions and took action. I sold my Korean holdings at Monex Boom, so that only Hong Kong listed shares remain in my portfolio with them. I also brought down the total value of my holdings below 500,000 HKD as to purposely position myself for the HK rescue fund should that ever be necessary. Following are some thoughts I had.

Boom is a foreign broker for me, who holds my shares with a Korean broker which is foreign to them. If there is any issue with the shares or their registration in Korea, I will depend on Boom to resolve it on my behalf. There is no monetary incentive for them to act effectively, besides honoring our relationship and protecting their reputation.

Let me emphasize that I have no reason to doubt Monex Boom in any way. I have used their services for over 10 years and never found any flaw with them. I will keep holding Hong Kong and Chinese shares with them. There's just too many hops between me and my Korean shares to feel comfortable. I will have to find a local Korean broker like Cicero did or use Interactive Brokers if the Korean equity market is ever offered.

As noted before, I am a bit surprised the HK rescue fund bailed out the clients of six(!) defaulted brokers since 2006. It seems that segregating clients accounts was not practiced by these brokers. I do not speak Mandarin and could not research these cases further.

https://www.hkexnews.hk/sdw/search/searchsdw.aspx

Through this link you can list shareholders by stock descending by size of the holding. If we check a few large cap stocks, we learn there are a lot of brokers in HK. Boom seems to be a relatively small broker, although still in the top half of the long tail. Not any red flag by itself, but also not 'too big to fail'.

[Jakusimo]

Hi, I took me 4 weeks to open the account and buy a stock at the Korean broker eBest, as Cicero did. Everything went smoothly, eBest broker is very responsive and help me with all paper work.

I'm from Lithuania. It was no issue with notary, just I needed to make dual-language power of attorney.

Money transfer was via SWIFT took 5 days. Order execution by email. I have access to eBest platform to check my holdings, just everything in Korean.

[koowoonmo]

This is Koo from EBEST Investment & Securities who has been offering brokerage service to some of the investors here.

 

It's great to talk to investors who are interested in Korean stock market.

 

Feel free to contact me anytime regarding opening an equity account at EBEST or anything related to investing in Korean stock market. 

 

My email is [email protected], linkedin: linkedin.com/in/woonmo-koo-738547186.

 

Hope you guys have a great day.