1. Membership Fee for New Members
Outline
A clearing member wishing to trade in the stock market and the futures market should pay 900 million won for each membership (1.8 billion won in total). The membership fee for a non-clearing member is 450 million won.
Q: Why is the total 1.8 billion won?
A: To ensure equality between old and new members and prevent the possible sprawl in the number of securities and futures companies.
A clearing member has the right to trade and settle or clear a trade, while a non-clearing member’s right is limited to trading.
Effects
The 22% reduction in the membership fee (2.3 billion won to 1.8 billion won) for new members joining the stock and futures markets is expected to lower the transaction cost and, consequently, the barrier to market access.
The conversion of the merged exchange into a stock company separating shareholders (ownership) and members (trading rights) has, in turn, resulted in lowered membership fees. Consequently, members can now participate in stock and futures markets for a membership fee of 900 million won.
2. Market position for existing members will be expanded.
Outline
The board has decided to allow 8 securities firms currently participating only in the KOSDAQ Stock Market to trade in the Stock Market as well.
If they wish to become a clearing member of the Stock Market, they will have to pay 600 million won.
8 securities firms trading in the KOSDAQ market: Tong Yang Orion Investment Securities, E*TRADE Financial Corp., Daiwa Securities, Barclays, BNP Paribas, Korea RB, BNG, Fides Securities
The board also has decided to allow securities companies to become clearing members for other stock futures trading.
Since 19 securities firms trading in listed stock futures and 24 securities firms trading in other stock futures (24 companies) paid 1.8 billion won and 2.3 billion won to the Korea Stock Exchange and the Korea Futures Exchange respectively prior to their merger, no further fees will be imposed for reasons of equality.
“Other stock futures” refers to stock futures excluding KOSPI 200 futures (listed stock futures)
Effects
Eight securities firms trading only in the KOSDAQ market will also be allowed to use the Stock Market, thereby expanding their business scope.
As securities firms, key participants of the KOSDAQ market can now trade in other stock futures as a clearing member: this is expected to provide fresh momentum for the market and increase the trading volume.
(Reference: KRX Membership (as of July 2005))
Securities Members (80): 54 securities firms; 26 members dealing exclusively in bonds (banks)
Futures Members (55): 43 securities firms; 12 futures companies
Total (excluding members with double membership): 92 (54 securities companies; 12 futures companies; 26 banks)
