Coming Soon
The South Korean government begins the trial run of an omnibus account system next week. The omnibus account is to cover every trading order, settlement, feeder fund registration and the like with a single foreign investor ID registration.
The South Korean financial authorities are expecting that the omnibus account system, along with the extension of the trading hours of the South Korean stock and foreign exchange markets by half an hour starting from July this year, will help South Korea join MSCI’s watch list regarding its World Index, the latest version of which is scheduled to be made available next month. Still, the financial authorities have decided to remain out of the list for a while as the around-the-clock operation of the forex market, another prerequisite for joining the index, still requires extensive discussions with regard to foreign exchange volatility and so on.
According to industry sources, Nomura Securities and HSBC Securities recently informed the Financial Supervisory Service that they would participate in the test operation. During the trial run that starts next week, Nomura Securities registers omnibus accounts opened by foreign investors while HSBC Securities acts as an agent of the investors using the accounts to deal with investment reports and voting rights issues in their place.
Foreign investors can both convert their existing accounts in South Korea to omnibus accounts and open new omnibus accounts in South Korea or their countries. Still, the stocks each of them invests in are to be added together and a public announcement has to be made when his or her shareholding ratio in a single company is equal to or higher than 5%. The agent should help them not to violate the duty. The official implementation of the system is scheduled for January next year, after some improvements and tax-related discussions.