Analysts Give Low Ratings To Fee Slashing by Brokers

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Analysts Give Low Ratings To Fee Slashing by Brokers

Local brokerage firms are engaged in yet another round of price wars to raise market shares, cutting trading commissions or offering giveaways.

Analysts are critical of the moves, saying that the losses the companies will rack up will leave no funds to invest in improved customer service. Branch offices will have to encourage day trading, the critics add, in order to offset reduced commission income.

LG Investment & Securities Co. unveiled a new online trading system, dubbed iflg.com, last month. It exempted new customers from commission fees for the first 15 days of trading and began offering a 50 percent discount on commissions for existing investors. Thanks to the strategy, the securities firm increased its market share to 10.1 percent from about 7.5 percent before the promotion started, as day traders rushed to seize the chance.

Getmore Securities Co. has begun a new service, allowing customers to make up to 100 transactions a month by paying 30,000 won ($23.30).

Ten other stockbrokers, including Meritz Securities Co., Sejong Securities Co. and Hanwha Securities Co., are also offering commission discounts and staging promotional events to lure investors. Experts worry that the promotions will mean less investment by brokerages in promising businesses such as wrap accounts and investment banking.



by Ha Jae-sik

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