South Korean investors lose access to current quotes for several US ETFs
South Korean retail investors lost access to real-time quotes for some popular leveraged US exchange-traded funds during daytime trading. The reason was Blue Ocean ATS's suspension of trading in 18 securities to comply with US Securities and Exchange Commission requirements, Korea Herald reports.
The suspension took effect from Monday's trading session at 8:00 p.m. US Eastern Time. Most securities on the list are leveraged or inverse products. They include Direxion Daily Semiconductor Bull 3X Shares, ticker SOXL, and Direxion Daily MSCI South Korea Bull 3X Shares, or KORU. Both products are popular among investors from South Korea.
US regulator requirements
Blue Ocean Technologies explained that the platform had reached the Fair Access threshold for many securities over the course of a month. This time, the increased trading volumes were concentrated in leveraged products.
Under the SEC's Fair Access rule, an alternative trading system is subject to additional requirements if it accounts for at least 5% of trading volume in a particular security during four of the previous six months. Blue Ocean did not specify the reasons for the increase in volume, but the publication notes that one factor may have been increased trading in leveraged ETFs among South Korean retail investors.
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According to the Korea Securities Depository, the value of US stocks traded by investors from South Korea rose by 34%, from $48.9 billion in January to $65.6 billion in June. KORU ranked eighth among US securities by net purchases by Korean investors in June, at $145.7 million.
Trading without current quotes
South Korean brokers rely heavily on Blue Ocean to provide daytime trading in US stocks. Samsung Securities, Toss Securities and other companies said that transactions in the securities on the list are still possible through the alternative systems MOON and Bruce.
However, these platforms do not transmit quotes through Korean brokers' interfaces. As a result, investors have to place limit orders without seeing current prices. Blue Ocean said it would review trading volumes over the course of a month to determine a date for trading to resume, but did not name a specific timeframe.
