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Questions regarding security brokerage commissions
Answer
  • WriterFeng-Min Lin
  • Date2022-05-19
  • Views523
Dear Sir/Madam,
Recently we have been researching security brokerage commissions and reading OECD Methodological Guide for Developing Producer Price Indices for Services.
It says in OECD guide that the U.S., Korea, and Japan use the combination of the Model pricing method and the Percentage fee method for value-based commission pricing. 
The US and Korean uses “the number of traded securities” approach to define the unit transaction.  
In this approach, the nominal value of traded securities is divided into “the number of traded securities” and “the price of those securities.” 
The number of traded securities is held constant while changes in the value of commissions received by brokers as a result of changes 
in the valuation of traded securities are considered as price changes.
In the U.S. the number of traded securities is held constant at the sample price level, while in Korea the number of traded securities is implicitly held constant 
by using the average market price index (e.g., KOSPI, KOSDAQ) as the inflator to adjust changes in traded securities values.

After reading the guide, I have some questions as below. Would you please provide us the information or answers? Thanks.
1.	How is the representative unit transaction defined?
2.	How to collect percentage fees charged for commission? Do you get them form the chosen brokers? 
3.	Do you collect the percentage fees for different types of Securities Brokerage transactions? 
4.	How do you collect prices for different types of Securities Brokerage transactions?
5.	Do you use the average market price index (e.g., KOSPI, KOSDAQ) to adjust changes in traded securities values for all types of Securities Brokerage transactions?
6.	Do you have any document of methodology that will help us to understand the practical methods you implement to estimate prices of the security?
7.	Do you use both KOSPI for a certain type of Securities Brokerage transactions, while KOSDAQ for another type?
8.	Why do you use the average market price index (e.g., KOSPI, KOSDAQ) to adjust changes in traded securities values? Would you please give us the reasons? 
9.	What characteristics would determine the commission percentage fees in Korea (e.g. the method used to place the order, online or by phone; the type of client, retail or institutional; the size of the client)?
10.	How do the respondents calculate the commission percentage fees they provide? E.g. they take average of all the trades for all kinds of securities in a month.

I look forward to hearing from you. Your assistance will be appreciated. 

Kind regards,
Feng-Min Lin
Answer Statistics Korea/2022-06-07
Dear Feng-Min Lin, 

Thank you for visiting the KOSIS website. 

Korea Exchange engaged in security brokerage commissions recommended you to post your inquiry via the official website of Korea Exchange (http://global.krx.co.kr/main/main.jsp). I hope you'll get reply as soon as possible from Korea Exchange.

Warm regards,

Statistics Korea

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