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South Korean FSC looking to make fractional trading more accessible to traders

Karthik Subramanian

The Financial Services Commission (FSC) of South Korea, has said that it would be looking to allow fractional trading of both domestic and foreign stocks to make stock trading more accessible to all.

In 2019, the FSC had introduced fractional trading of foreign stocks as it had wanted to try out some innovative financial products as a form of testing with the larger goal of bringing the fractional trading in a full-fledged manner in due course of time. This was offered by Shinhan Investment and Korea Investment & Securities and this kind of trading was generally welcomed by all traders as by the end of 2021, the number of traders had crossed 600,000. The investment amount into these fractional stocks had also crossed a billion KRW.

FSC seems to have been encouraged by these results and is hence looking to expand this to both domestic and foreign stocks as well. For this purpose, the FSC has set up a specialized infrastructure at Korean Securities Depository (KSD) which the companies, that have been authorized to offer fractional trading, can use. By bringing all the fractional trading into a single infrastructural entity, the FSC hopes to improve safety and convenience for all market participants.

It is learned that the FSC would also be working to make changes to the legislation so that fractional trading and its challenges would be handled and regulated accordingly. But the FSC has said that since the legislation is likely to take a lot of time, it would be going ahead with the implementation of fractional trading which it hopes to make available for foreign stocks by the end of the year and for domestic stocks by the third quarter of next year.

Fractional trading in stocks is a growing concept in many countries of the world and several steps have been taken towards the implementation of the same to make it more accessible to all. The regulators believe that this would help provide every trader with the access to hold shares in big companies which may not be possible under normal circumstances due to their high costs. With fractional trading, investors would be able to practice better risk management, hold on to shares for longer, and also plan their investments in a better manner.

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