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Korea's Online Stock Trading Surges To US$20.8 Billion

Online securities trading in Korea is growing at a faster clip than in many other countries as increasing number of stock investors gain an access to the Internet and PC communications networks.

Last year, Korea's online trading of stocks through the Internet and PC networks amounted to 25 trillion won (about US$20.8 billion), the second largest in the world only after the United States, according to industry sources.

The sources said that online stock trading had increased substantially since it was introduced in mid-1997. Last December, online trading amounted to 5.27 trillion won (US$4.4 billion), compared with July 1997's 200 billion won (US$166 million).

The nation's online stock trading is expected to swell to around 100 trillion won (US$83 billion) in the next several years with a legal framework for electronic transactions to be established in July, according to industry sources.

As the market for online stock trades booms, domestic securities firms compete with each other by cutting their commission charges for such online trading.

The price cutting race was started last August as competition intensified, and now, most local brokerage firms slashed their commission charges for online trading by up to 50 percent.

"Now, online brokerage firms are placing more emphasis on improving the overall quality of their trading services to attract customers rather than on price cut." said an industry analyst. Currently, a total of 20 domestic brokerage houses, including the market leaders such as Daewoo Securities, Samsung Securities and LG Securities, offer online trading services, with nine of them also providing services for stock trading over the Internet.

Samsung Securities, the most profitable player which is affiliated with Samsung Group, recently announced that its daily online securities trading volume on April 2 hit 15 billion won (US$12.5 million), for the first time in Korea.

The company's online trading amounted to 709.2 billion won (US$578 million) in March, taking some 20 percent of the the company's entire trading volume for the month, according to company officials.

"We are planning to raise the current 20 percent ratio of online trading up to 30 percent by the end of this year by concentrating more on quality improvement of our services rather than on cutting commission charges," said Kim Hyeon-Gon, president of Samsung Securities.

"In this connection, we have been investing continuously in online trading service improvement, while upgrading systems in a bid to prepare for the future system capacity, enabling more than 100,000 customers access the system simultaneously."

Last month, Samsung also launched Internet trading services for foreigners by creating an English-language Web site, which provides customers with various services such as stock brokerage service, market information and investment consultation services, according to Samsung Securities officials.



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