As MERITZ Securities' strategy of declaring 'no commission on overseas stocks' gained traction in the market, the calculations of competing securities firms became complicated. The previous experience meant that to counter free offerings, they ultimately had to present equally free options. There is growing concern that the revenue from overseas stock commissions, which has emerged as a cash cow for the brokerage institutional sector, may decrease due to this cutthroat competition. Investors looking to cut any expenditure feel pleased with this situation.
According to the financial investment industry on the 27th, MERITZ Securities has successfully attracted about 3 trillion won since launching a fully free transaction and exchange fee event on Nov. 18 last year. Before the event, MERITZ Securities' 'super365' account assets were 930 billion won, and now they have exceeded 4 trillion won. This means more than 1.5 trillion won has flowed in each month.
The event provides benefits of exempting transaction fees for domestic and U.S. stock trading and dollar exchange fees to investors holding a super365 account. In addition to transaction and exchange fees, MERITZ Securities also bears the related institution fees payable to the Korea Exchange and the Korea Securities Depository. This is the first time a securities firm has covered these related institution fees.
Until now, MERITZ Securities has distinguished itself more in the corporate finance sector than in retail. Bringing out the fully free fee card was a gamble to increase its almost nonexistent presence in the retail market. MERITZ Securities plans to offer these completely free benefits until the end of 2026.
Competitors have become anxious. As Toss Securities, with its intuitive user interface, attracts new investors in their 20s and 30s, MERITZ, with its financial strength, has also entered the retail war. As of the end of September last year, MERITZ Securities had accumulated 6.109 trillion won in equity, qualifying as a large investment bank (IB) (with more than 4 trillion won in equity). According to DAISHIN SECURITIES, it is estimated that MERITZ Securities will spend over 100 billion won annually to cover the free offerings.
Currently, not only traditional retail giants like Kiwoom Securities, Mirae Asset Securities, Samsung Securities, and KB Securities but also smaller securities firms aiming to expand their retail territories are reportedly discussing strategies to minimize customer attrition internally. One securities firm official noted, 'MERITZ Securities' retail market share is minimal, so there would be no significant damage, but the point here is that (MERITZ has) started a 'free' offensive and that has worked.'
This official stated, 'Investor interest is increasingly focusing on overseas stocks, making it inevitable for competition among securities firms to intensify, and investors seeking to increase their overseas stock proportion will look for securities firms that can alleviate their commission burdens.' He added, 'Ultimately, many securities firms seem likely to jump into the chicken game, risking a decline in profitability.'
According to the Korea Securities Depository's securities information portal SEIBRO, the amount of U.S. stocks traded by individual investors in 2024 reached $50.99 billion (approximately 731 trillion won). This represents an 87% surge compared to 2023. This directly translates to commission revenue for securities firms. According to the Korea Financial Investment Association's electronic disclosure service, the revenue from foreign securities trust commissions for domestic securities firms that facilitated overseas stock investments amounted to 918.7 billion won as of the end of the third quarter last year. Despite not including fourth-quarter revenue, this already significantly surpasses the annual revenue of 694.6 billion won in 2023.
According to DAOL Investment & Securities, the revenue contribution of overseas stock commissions from the five largest domestic securities firms rose from 16.4% in 2023 to 25.6% last year, an increase of 9.2 percentage points (P). In contrast, the contribution of domestic stock commissions declined from 83.6% to 74.5% during the same period.
Jung Jun-ho, a 38-year-old office worker and individual investor, stated, 'Overseas stock commissions are relatively high compared to domestic stocks, and the tax rate on excess profits is also high, so if there is a securities firm platform that significantly reduces transaction commission burdens or offers benefits in other ways, I would naturally switch.'