Hana Securities' plans to enter the Prime Brokerage Service (PBS) market are facing setbacks after years of internal discussions that began in 2019. The South Korean brokerage expanded its Delta 1 department this year to strengthen securities lending and total return swap operations, fueling market speculation about imminent PBS entry. The delay stems from high personnel costs for veteran staff from the six major PBS securities firms and the infrastructure advantages held by established market leaders, according to industry sources on May 24.
Hana Securities Began PBS Discussions in 2019 After Meeting Capital Requirements
Hana Securities initiated PBS market entry discussions in 2019 after meeting the 3 trillion won capital requirement and receiving its comprehensive financial investment business license designation. The qualification provided the legal framework for PBS operations, though actual service launch requires regulatory verification of detailed IT infrastructure and risk management systems. The firm has maintained ongoing internal deliberations about market entry since obtaining the license.
Delta 1 Department Expansion Fueled Market Entry Speculation This Year
Internal discussions accelerated this year as Hana Securities expanded personnel in its Delta 1 department, which handles PBS-related operations including securities lending and fund total return swaps. The department strengthened its operations, leading to widespread industry speculation that the firm would establish a dedicated PBS organization and formally enter the market. Hana Securities' existing wealth management infrastructure and Delta 1-centered securities lending capabilities were cited as factors supporting potential PBS entry.
High Personnel Costs and Market Infrastructure Pose Entry Barriers
Recent internal reviews concluded that realistic limitations have led to slowing or effectively suspending the initiative. The compensation for veteran personnel from the six major PBS securities firms—KB, NH, Korea Investment, Mirae Asset, Samsung, and Shinhan—has risen amid hedge fund and PBS market expansion during the recent stock market boom. Hana Securities faces excessive cost burdens for talent acquisition as a late entrant establishing market presence. The Meritz Securities case added to concerns, as that firm struggled to achieve profitability despite obtaining PBS qualifications early, integrating dedicated organizations, and recruiting personnel last year. Meritz has faced difficulties entering full operations due to challenges in securing custody and credit extensions and meeting stringent risk management standards.
Industry Observers Remain Divided on Entry Timing
A financial industry source familiar with the matter stated that market speculation about PBS entry expanded significantly as the Delta 1 department strengthened operations in securities lending and swaps, while acknowledging internal feasibility reviews and noting numerous challenges including personnel recruitment and existing operators' market share. Some industry observers maintain predictions that Hana Securities' PBS entry will occur soon, describing the service as essential homework for expanding IB and fee income. One securities industry source noted that Hana Securities already operates PBS-related services including securities lending and swaps, making it a formidable potential competitor, and stated that related industries remain tense amid rumors of the firm's entry becoming visible.
FAQ
What prompted Hana Securities to consider PBS market entry in 2019?
Hana Securities began PBS market entry discussions in 2019 after meeting the 3 trillion won capital requirement and receiving its comprehensive financial investment business license designation.
Why did Hana Securities delay its PBS market entry plans this year?
The delay resulted from high compensation costs for veteran personnel from the six major PBS securities firms and the infrastructure advantages held by established market leaders, according to internal reviews conducted recently.
What challenges did Meritz Securities face in its PBS operations?
Meritz Securities struggled to achieve profitability as a late entrant and faced difficulties securing custody and credit extensions while meeting stringent risk management standards, despite obtaining PBS qualifications early and recruiting personnel last year.
