Genyi

After taking a few steps back, I reconsidered our discussion above and earlier in the NICE Information & Technology thread. I drew my conclusions and took action. I sold my Korean holdings at Monex Boom, so that only Hong Kong listed shares remain in my portfolio with them. I also brought down the total value of my holdings below 500,000 HKD as to purposely position myself for the HK rescue fund should that ever be necessary. Following are some thoughts I had. Boom is a foreign broker for me, who holds my shares with a Korean broker which is foreign to them. If there is any issue with the shares or their registration in Korea, I will depend on Boom to resolve it on my behalf. There is no monetary incentive for them to act effectively, besides honoring our relationship and protecting their reputation. Let me emphasize that I have no reason to doubt Monex Boom in any way. I have used their services for over 10 years and never found any flaw with them. I will keep holding Hong Kong and Chinese shares with them. There's just too many hops between me and my Korean shares to feel comfortable. I will have to find a local Korean broker like Cicero did or use Interactive Brokers if the Korean equity market is ever offered. As noted before, I am a bit surprised the HK rescue fund bailed out the clients of six(!) defaulted brokers since 2006. It seems that segregating clients accounts was not practiced by these brokers. I do not speak Mandarin and could not research these cases further. https://www.hkexnews.hk/sdw/search/searchsdw.aspx Through this link you can list shareholders by stock descending by size of the holding. If we check a few large cap stocks, we learn there are a lot of brokers in HK. Boom seems to be a relatively small broker, although still in the top half of the long tail. Not any red flag by itself, but also not 'too big to fail'.

For Philip Securities Singapore, you may want to check this page: https://globalmarkets.poems.com.sg/markets-we-offer/south-korea-krx/ POEMS is the electronic platform of Philip. You need to call your Trade Representative personally to trade the Korean market. So, I guess you can only view your Korean shares on POEMS without being able to trade them online. Commission in this case is 0.40% but also note the custody charges of SGD 2.14 per month which can be avoided as a larger customer.

Interactive Brokers has a Features Poll where users can suggest new products and functionality and other users can support the suggestion (or not) with their vote. Recently someone suggested to add access to the South Korean Stock Exchange. https://www.interactivebrokers.com/en/index.php?f=2493&sid=15782 It looks like the admins didn't even let the voting start, but set the status to Scheduled right away. Note that Interactive Brokers already provides access to Korean Futures. This looks a promising sign of more to come.

It's maybe good to mention that this threat spawns from the discussion topic Nice Information & Technology where we went off-topic discussing broker issues. Starting here: https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/nice-it/msg455532/#msg455532 As discussed there, there is another important concern besides platform ease-of-use and trading costs. That is the safety of your holdings when a broker outside of Korea (like Boom) uses a broker inside Korea to process and register your Korean trades. What would happen with clients' stock holdings and cash balances if one of those brokers would default and cease operations.

RetroRanger, thanks for taking this up with Boom. Do you understand the above to mean that also client stocks traded outside of HK/China, such as Korea, are to be held in segregated accounts? Or does the HK regulator only enforce that for HK/Shanghai/Shenzhen stocks? Tbh, the issue keeps bugging me. Why is there a huge rescue fund when it would be much more efficient to check regularly whether all licensed brokers keep their clients' accounts segregated. Also, the rescue fund has honored claims to clients of 6 defaulted brokers since 2006: https://www.hkicc.org.hk/claims/notice_e.htm This seems a rather large number of brokers who had not implemented or sustained the mandatory practice of keeping client accounts segregated.

RetroRanger, thanks for taking this up with Boom. Do you understand the above to mean that also client stocks traded outside of HK/China, such as Korea, are to be held in segregated accounts? Or does the HK regulator only enforce that for HK/Shanghai/Shenzhen stocks? Tbh, the issue keeps bugging me. Why is there a huge rescue fund when it would be much more efficient to check regularly whether all licensed brokers keep their clients' accounts segregated. Also, the rescue fund has honored claims to clients of 6 defaulted brokers since 2006: https://www.hkicc.org.hk/claims/notice_e.htm This seems a rather large number of brokers who had not implemented or sustained the mandatory practice of keeping client accounts segregated.

Thanks Cicero, you have been diving a lot deeper as I did at the time. I always made the same assumption as you did. I understand my cash balance is at a certain risk, but I wonder why they don't give customers their long positions in case of a default. I also wonder whether you give up your rights as a creditor in the bankruptcy procedure of the failed broker once you accept compensation from this fund. Food for thought since my balance is above 500,000 HKD right now. But regardless, Korean stocks are not covered by the fund, so your last bullet point may be the most important one. I wonder whether any Korean broker welcomes foreign customers, so that at least the broker default risk is limited to 1 organization. Or maybe petition Interactive Brokers to access the Korean market?

Thanks Cicero, you have been diving a lot deeper as I did at the time. I always made the same assumption as you did. I understand my cash balance is at a certain risk, but I wonder why they don't give customers their long positions in case of a default. I also wonder whether you give up your rights as a creditor in the bankruptcy procedure of the failed broker once you accept compensation from this fund. Food for thought since my balance is above 500,000 HKD right now. But regardless, Korean stocks are not covered by the fund, so your last bullet point may be the most important one. I wonder whether any Korean broker welcomes foreign customers, so that at least the broker default risk is limited to 1 organization. Or maybe petition Interactive Brokers to access the Korean market?

I deposit and also withdraw money through international bank transfers. I always submit the deposit notification, although I am pretty sure they will identify my payment without it too. A Chinese person can have different names in Mandarin and his/her local dialect. Also translation from Chinese to pinyin can be ambiguous. Plus there's traditional and simplified Chinese writing in Hong Kong. So, for some cases they will need help crediting the payments to the right account. If all your data is unambiguous in this context, you can probably ignore that notification, but it takes 1 minute to fill in anyways.

I deposit and also withdraw money through international bank transfers. I always submit the deposit notification, although I am pretty sure they will identify my payment without it too. A Chinese person can have different names in Mandarin and his/her local dialect. Also translation from Chinese to pinyin can be ambiguous. Plus there's traditional and simplified Chinese writing in Hong Kong. So, for some cases they will need help crediting the payments to the right account. If all your data is unambiguous in this context, you can probably ignore that notification, but it takes 1 minute to fill in anyways.

I am not a US citizen or US resident, so I can't comment on the specific regulatory consequences here. They provide two alternatives to the cheque. I actually visited their office in person to sign the forms, since I had a stop-over in Hong Kong anyway. I gained some confidence by seeing their offices and chatting with the representative. Admittedly, that's hard to do now, but they also provide the 'witness' option to verify your signature and identity. If you can't proceed with Boom, there are more options to explore: https://the-international-investor.com/comparison-tables (Note that some info here may be outdated, but it could still provide a useful starting point). Is it worth all the hassle? My main broker is Interactive Brokers. They have had Korean futures for years already, but for some reason Korean stocks were never made available. Since smaller markets such as Latvia and Hungary are added all the time, I conclude there must be some insurmountable hurdle for IB to add Korea. Hence, I keep using Boom for Korean stocks. Also, I appreciate having access to markets as Malaysia, Thailand, Indonesia and Taiwan. I do look at stocks in these countries and if there is an obvious bargain I can act immediately.

My last Korean dividend was exchanged into USD at: 2020/04/03 Sold KRW @ USD 0.00080775 on 2020/04/03 (This was from LG H&H pref. shares 51905... I am not a shareholder in Nice Information & Technology yet) When I check this date at https://www.xe.com/currencytables/?from=KRW&data-ipsquote-timestamp=2020-04-03 the mid-market rate is 0.0008067238, but most likely that's the US end-of-day rate and my KRW were sold earlier in the day or already on april 2nd US time. The 2020-04-02 rate on that website is 0.0008142364. Without knowing the exact time of the FX transaction, it's hard to verify exactly, but whatever margin they take seems low compared to the daily randomness of the FX rate. The fees are listed under the 'Customer Service' button. I haven't been charged any fees not mentioned on that page. Except for the somewhat elusive FX rate, which I explored above.

I have used Boom for about 12 years. I am satisfied with their services. I invest long term and only make a few trades per year. I login to their website for those and never tried their app. I also don't rely on their real-time quotes, but those are available for an extra fee. For all their fees, click the Customer Service button on the homepage. Some of their commissions could be considered high. That's why I use Boom mostly to access markets not available with other brokers. They do not invest your surplus cash balance automatically in a money market fund, like Phillip does. So you may want to transfer it if you have a large cash balance or invest in a money market etf yourself. Just to feel safe. But on the other hand, Boom is part of a larger Japanese financial services company called Monex. I don't believe it will just fail suddenly. I've been on the phone with customer service only once in all that time. As you probably know, Hong Kong residents use Cantonese and Mandarin on a daily basis. The representative was hard to understand in English. I prefer to raise issues by email, but the language barrier may become a concern if you prefer to call them. Their reporting is basic but clear and sufficient for my purposes. Everything can be downloaded online; they don't mail anything on paper anymore. In summary, I'm happy but also note that I am not a 'heavy' user of the platform.

www.boom.com

Unfortunately, FB didn't release any details on the situation so far, making it impossible to make a guess whether the business is still a going concern. But yesterday, they released a Loss Alert and provided some additional financial data with it. There is no full P&L, Balance Sheet nor Cashflow statement but the document is useful enough to check out. I might type some comments on it later. From the loss alert: the Group’s investment property in Macau has generated steady rental income in the First Quarter and will continue to be so. No issues here, which is a positive surprise to me. I assumed that whoever took the lease would be in the retail business and hence in a difficult profit/cashflow situation. If someone here lives in Macau, or knows someone there: a personal observation of how the building is used right now might be useful (“S. Paulo”, Largo da Companha de Jesus N°2, Yellow House on the right side where the stairs towards the St. Paul ruins start).