IB offers Korean SSFs. They are liquid and perhaps better as don't have to deal with the 30bps stamp tax on sales. (which of course you'll pay in some shape or form within the SSF spread). That's the easiest way to trade the big name Korean stocks IMO.
That's what I don't get given the highly liquid Kospi, how can prop firms trade Kospi if there are shorting and other constraints on the singles side. None applies to them?
Can hedge with SSFs but there is access for institutions for share trading. They have investor registration requirements which need to be filed and you need an institutional desk to get currency conversions at a decent rate. The biggest thing though when the index options were crazy liquid was that there was a large retail component and the market makers (who were really HFTs) were scalping size back and forth in the front month. It wasn't about hedging with stocks but then again there was also plenty of expiry games such as the Deutsche Bank manipulation which more than covers the cost of stamp. https://en.yna.co.kr/view/AEN20190402008400315 "Ong and the others are accused of working together to carry out a 2.4 trillion won (US$2.1 billion) stock selloff on South Korea's main KOSPI bourse on Nov. 11, 2010."
Generally when trading isn't offering to US retail, but available to Institutional it's about reciprocal compliance agreements. Korean futures are CFTC approved for US retail, even though they just got tagged for by the CFTC for regulatory shortcomings. Last I looked no reciprocal agreement with the SEC. Also don't confuse market cap. and volume with liquidity. Kospi blows almost everything out by volume, but it really isn't very liquid and I suspect that is part of why no regulator has look to the reciprocal agreement completed. In the '80s one of the most actively traded names in the US was TMX(Telefonos Mexixo) and Mexico had fairly tight currency restrictions. Most days it was the most Stock and options traded in the US and almost all the volume was an arb on the currency restrictions. Large holders and small investors alike were doing conversions to arb the restrictions. There is more granularity to the strategy, but I suspect there is little appetite from either regulator to make it trade able here._
There is nothing restricting US retail to trade Korean stocks. You do need to have an investor ID and deal with the currency controls. The SEC has no provisions on trading stocks outside of the US that I am aware. If so, please post a link. They do have restrictions on stock options which is another matter.
SEC requires a reciprocal compliance agree with the regulator of the other country - otherwise no retail securities. We have it with numerous countries, CFTC has an agreement with Korean regulator on CFTC regulated products. Easy to execute it on indicies - a bit tougher on stocks. Some markets, like the Canadian CSE allows qualified investors and institutions.
The SEC has a list on their site. They did execute a reciprocal discussion agree with Korea in 06, but no reciprocal trading agreement. No enforcement cooperation - no trading. Cooperative Arrangements with Foreign Regulators Cooperative Arrangements Fact Sheet Argentina (December 9, 1991) Australia (October 20, 1993) Brazil (July 1, 1988) Canada (January 7, 1988; September & October 2015) Chile (June 3, 1993) France (December 14, 1989) Germany (November 22, 1993; March 24, 1994; October 17, 1997) Hong Kong (October 5, 1995) IOSCO (May, 2002) Israel (February 13, 1996) Italy (May 3 & 5, 1993) Japan (May 23, 1986; May 17, 2002; January 12 & 16, 2006) Jersey (May 22, 2002) Mexico (October 18, 1990) Netherlands (December 11, 1989; July 1, 1992) Norway (September 24, 1991) Portugal (October 10, 1997) Singapore (May 16, 2000) Spain (July 8, 1992) Switzerland (August 31, 1982; November 10, 1987; November 3, 1993) United Kingdom (September 23, 1986, September 25, 1991) Communiqués/Joint Statements Costa Rica (October 10, 1991) The Commission of the European Communities (September 23, 1991) South Africa (March 2, 1995) Sweden (September 25, 1991) EBA Framework Cooperation Agreement (September 2017) Hong Kong (January 18, 2017) Hong Kong (October 5, 1995) Mexico (October 2012) Brazil (July 2012) European Securities and Markets Authority (March 2012) Cayman Islands (March 2012) Canada (June 2010; September 2011; September & October 2015) Germany (April 26, 2007) Switzerland (November 2009) Belgium - National Bank of Belgium (January 30, 2001; addendum March 9, 2017) Belgium (June 29, 2006, and July 6, 2006) United Kingdom Financial Services Authority (March 14, 2006) United Kingdom Bank of England (October 27, 1997) Certain Entities in the Asset Management Industry (MOUs with European Union and the European Economic Area member state regulators) Austria (July 2013) Belgium (July 2013) Bulgaria (July 2013) Cyprus (July 2013) Czech Republic (July 2013) Denmark (July 2013) Estonia (July 2013) Finland (July 2013) France (February 2014) Germany (July 2013) Gibraltar (October 2016) Greece (July 2013) Hungary (July 2013) Iceland (July 2013) Ireland (July 2013) Italy (July 2013) Latvia (July 2013) Liechtenstein (July 2013) Lithuania (July 2013) Luxembourg (July 2013) Malta (July 2013) Netherlands (July 2013) Norway (July 2013) Poland (July 2013) Portugal (July 2013) Romania (July 2013) Slovak Republic (July 2013) Spain (July 2013) Sweden (July 2013) United Kingdom (July 2013) Issuers and Financial Reporting United Kingdom (April 2007) Belgium (May 2008) Bulgaria (May 2008) Portugal (May 2008) Norway (May 2008) Germany (December 2009) Spain (February 2012) 3. Data Protection: IOSCO Administrative Arrangement for the Transfer of Personal Data (May 10, 2019) Argentina (December 9, 1991) Chile (June 3, 1993) China (April 28, 1994) Egypt (February 11, 1996) Hungary (June 22, 1990) India (March 6, 1998) Indonesia (March 24, 1992) IADB/UNECLAC (September 26, 1991) Russia (December 5 & 6, 1995) Press Release Terms of Reference China Securities Regulatory Commission (May 2, 2006) Press Release Terms of Reference European Securities and Markets Authority (formerly Committee of European Securities Regulators) (June 4, 2004) SEC-CESR Work Plan (August 2, 2006) Securities and Exchange Board of India (January 8, 2008) Press Release Terms of Reference Japan Financial Services Agency (January 30, 2006) Press Release Terms of Reference Korea Financial Supervisory Commission (June 27, 2006) Press Release and Terms of Reference
Thanks I didn't know that as I was of the understanding foreign brokers couldn't solicit in the US but a US regulated broker could have an arrangement to route to any equity market it pleased for listed securities in non-FATF countries. Regardless, getting the Investor Registration Certificate for a retail participant makes it impractical, hence SSFs are the way to go.