Korean Houses Prepare For Second Round of Equity Licenses

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Korean Houses Prepare For Second Round of Equity Licenses

Domestic Korean securities houses, including Dongwon Securities, Good Morning Shinhan Securities, Hana Securities, Woori Securities Co., are readying to start offering over-the-counter equity derivatives in the Korean market. The move will likely bring increased business to international houses as the domestic firms will hedge their positions. "Lots of things are changing--this is a great time in the Korean market," said Hong Shik Kim, senior executive managing director and head of trading and derivatives at Good Morning Shinhan in Seoul, noting that deregulation is allowing local houses to set up an onshore equity derivatives market in Korea. "This market will get bigger and bigger," said J.K. Kim, head of derivatives at Hana Securities. Market officials expect the firms to receive their OTC equity derivatives brokering licenses, which will permit them to sell won-denominated OTC equity products, next month.

The first round of licenses were given to LG Investment & Securities Co., Samsung Securities and Daewoo Securities Co. (DW, 10/13).

Good Morning Securities has transferred five staff from other groups to kick-start the operation and is looking to hire an experienced equity derivatives trader from an international house. As for Hana, it has also transferred staff from other divisions to form a team of six. "We're looking to hire two to three additional traders as well as a financial engineer," said J.K. Kim.

This move is the latest deregulation to come out of Korea. International firms, such as Morgan Stanley and Citibank, are examining moving into the fixed income market in Korea (DW, 11/18).

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