The Security Firms in Search of an Escape Hatch

In anticipation of the proposed general strike by the bank labor unions which could deal a heavy blow to the stock market, the securities and investment firms are currently examining various escape routes in order to garner a cushion of liquid assets through various means including emergency loans.

The Korea Securities Dealers Association has formulated an emergency contingency measure which were sent to each of the securities firms to guarantee a smooth transaction of buying and selling orders from the individual and corporate stock investors.

Many of the employees of the securities firms reported to work on Sunday in order to transfer funds to the banks which will not join the walkout and examine the various mechanisms which have been put in place to ride out the upcoming turbulence.

Especially for the possibility of investors` inability to settle the account due to their inability to withdraw funds from the banks, the securities firms have in store a cache of funds to be used for the purpose with a contingency of acquiring emergency loans should the cache prove insufficient.

For the corporate investors, the securities firms have requested their customers to transfer adequate funds to a non-participating bank so that they could cover their call to account, should such become necessary during the height of the strike.

For stock transactions through the internet such as the Home Trading System, they have been asked to deposit funds into the securities firms prior to the strike.

The KSDA has warned that should even one securities firm find it impossible to account for its transactions, it would freeze the whole stock market and bring about a devastating domino effect which could send a shock wave throughout the world.

Jinki Lee leej@donga.com