Kiwoom Securities, a strong player in brokerage, has confirmed that it has lost the top position in the overseas stock market share to Toss Securities as of April. This is attributed to the controversy over inflated transaction volumes, the removal of some stocks from the performance acknowledgment list, and the impact of stock order execution delays leading to some customer attrition.
According to the financial investment industry on the 10th, Kiwoom Securities' overseas stock market share in the first week of April (April 1-4) was 18%, losing the top position to Toss Securities, which recorded 19%. Just in the third and fourth weeks of March, Kiwoom Securities had an overwhelming market share of 32-34%. Toss Securities held the second position with a market share in the 15% range, marking a significant gap. However, as soon as April began, Kiwoom Securities' market share plummeted, falling behind Toss Securities.
The sharp decline in Kiwoom Securities' overseas stock brokerage market share can be attributed to two main factors. First, there is the adjustment of cash compensation membership. After conceding the top overseas stock position to Toss Securities at the end of last year, Kiwoom Securities introduced a new membership in January, offering cash ranging from 10,000 won to a maximum of 500,000 won to customers who met the conditions based on the execution amount of overseas stocks. Kiwoom Securities is said to have allocated a considerable amount to the rewards budget.
The problem is that the introduction of this membership led to a surge in cherry-picker (opportunistic consumers) inflow seeking only rewards. Since the start of the membership, the top overseas stock purchases and sales on Kiwoom Securities' mobile trading system (MTS) included exchange-traded funds (ETFs) such as 'iShares Short Treasury Bond', 'SPDR Bloomberg 1-3 Month T-Bill', and 'iShares 0-3 Month Treasury Bond'.
These ETFs all have U.S. short-term government bonds as their underlying assets. Their characteristics include low price volatility and small bid-ask spreads, which make them frequent targets for cherry-pickers who aim for securities firms' cash reward events. Last September, KB Securities also restricted online purchases of these ETFs that were embroiled in the cherry-picker controversy.
Kiwoom Securities reclaimed the top overseas stock position after the membership was introduced; however, it faced criticism for aiding cherry-pickers in their round-trip trading and inflated transaction volumes. Ultimately, Kiwoom Securities announced at the end of March that it would exclude certain stocks, often mentioned as prime targets for cherry-pickers, from the performance acknowledgment list.
In this situation, on the 3rd and 4th of this month, stock order processing delays occurred for two consecutive trading days. As system errors recurred, Kiwoom Securities suspended services entirely over the weekend (5th-6th) for extensive inspections. Frustration exploded among investors who could not trade on time due to the delays, leading Kiwoom Securities to initiate compensation procedures.
An industry official noted, "Excluding cherry-picker target stocks from the performance acknowledgment list is likely the main reason for the sharp decline in Kiwoom Securities' overseas stock market share, but it seems that the dissatisfaction felt by some investors due to the unstable transaction system also influenced the drop in market share as they moved to other securities firms."
However, since Kiwoom Securities apologized for the transaction execution delays and decided not to charge domestic stock commissions for a week, there is a view that market share could recover. An industry official stated, "While facing fierce competition from latecomers, Kiwoom Securities' competitiveness in the brokerage sector is so strong that it is unlikely to collapse easily."