Prime brokerage services enjoy rapid growth in S. Korea

2017.06.12 17:11:59 | 2017.06.12 17:12:29

이미지 확대
Prime brokerage dedicated to hedge funds is burgeoning in line with increasing hedge fund activities, data showed on Sunday.

Fees collected by six securities companies offering a bundled package of services to aid hedge funds reached 10.28 trillion won early this month, according to data compiled by Maeil Business Newspaper. It marks the first time that the PBS market surpassed the 10 trillion won threshold.

Prime brokerage services (PBS) cover a full spectrum of services for hedge funds, such as cash and stock loan, deposit payment and settlement. For this reason, hedge funds use PBS-enabled brokerage houses as their window for financial transactions. Shinhan Investment recently jumped into the market where five players -- Samsung Securities, NH Investment & Securities, Korea Investment & Securities, MiraeAsset Daewoo Securities and KB Securities had been in rivalry.

PBS was launched in late 2011 when hedge fund business was approved by financial authorities. In 2015, when the market entry level was eased for hedge fund operators, the PBS market got on track for a break-neck growth. The one-year growth doubled to 6.6 trillion won at the end of last year and another 50 percent for the first six months of this year.

Samsung Securities leads the pack by increasing its operating size by 1.28 trillion won this year alone, upping it to 2.94 trillion won in total. Samsung’s rapid advance was driven by a sharp rise in bond-type funds in the country’s hedge fund market. Those funds are usually owned by wealthy investors who represent a big share of Samsung accounts.

By Han Ye-kyung

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]