Domestic securities firms have decided to resume weekly transactions of U.S. stocks, which had been suspended for a year. The Korea Financial Investment Association plans to finalize the specific resumption date within this month after gathering the positions of the securities firms and consulting with financial authorities.
On the 20th, according to the financial investment industry, the Korea Financial Investment Association held a meeting with practitioners from securities firms regarding the U.S. weekly transactions on the afternoon of the 19th and decided to set a resumption date within this month, conveying the opinions of the firms in favor of the resumption to the Financial Services Commission. Currently, related securities firms are undergoing order testing procedures for smooth transactions, aiming to normalize weekly transaction services by the end of the year.
The U.S. weekly transactions were suspended after the Black Monday incident on August 5 of last year when global stock markets plummeted. At that time, 19 domestic securities firms were conducting weekly transactions through Blue Ocean Technologies, an alternative trading system (ATS) in the U.S., but the surging order volume led Blue Ocean to notify them of the suspension. Consequently, transaction requests worth 630 billion won, received through approximately 90,000 accounts of domestic investors, were canceled all at once.
In the meantime, financial authorities have stated that in order to prevent a recurrence of the Blue Ocean incident, responsibility must be clearly established, and services should resume only after adequate preparations are made. While the official approval of financial authorities is not required for the resumption of weekly transaction services, securities firms were essentially in a situation where they had to be cautious of the authorities. In fact, a survey conducted by the Korea Financial Investment Association at the beginning of the year indicated that about half of the related securities firms expressed the need for caution regarding the resumption of weekly transactions.
The situation began to change when on the 18th of last month, the Financial Supervisory Service concluded that securities firms had no legal liability for investor losses related to the Blue Ocean incident, citing that Blue Ocean had unilaterally notified the suspension of transactions without prior consultation. As a result, during the opinion-gathering process conducted from the end of last month to early this month, most securities firms raised their hands in favor of resuming weekly transactions.
Currently, many securities firms maintain contractual relationships with Blue Ocean, making it highly likely that most weekly transactions will be conducted through Blue Ocean. Additionally, securities firms are reportedly considering securing additional ATS such as Moon and Bruce to enhance transaction stability.
Meanwhile, Blue Ocean opened an office in Yeouido, Seoul, earlier this year and has begun efforts to communicate more with domestic securities firms. Brian Hindman, the CEO, visited Korea to apologize to clients, promising to strengthen the system and prevent a recurrence, while also introducing a policy to compensate up to $250,000 (approximately 350 million won) per month in case of technical disruptions. However, they have emphasized that the incident from last year cannot be applied retroactively.
A representative from the securities industry said, "As we are maintaining a contractual relationship with (Blue Ocean), fixed costs continue to incur, and with the introduction of a 24-hour stock trading system led by major U.S. exchanges such as NASDAQ scheduled for the second half of next year, we cannot just wait indefinitely. We hope for a quick setting of the resumption date after consulting with the authorities."