Korea Investment & Securities said Sunday it has launched a repurchase agreement (RP) service that allows investors to manage short-term funds in Japanese yen (JPY).
A foreign currency RP is a product in which a brokerage sells bonds to investors under an agreement to buy them back at a predetermined price after a set period. Investors receive interest in foreign currency for the period during which they hold the bonds. The product is useful for managing short-term idle funds, as it allows investors to safely deposit foreign currency assets while permitting deposits and withdrawals at any time. For "Ilhak-gaemi" (retail investors in Japanese stocks) waiting for their next buying opportunity after selling shares, parking funds in a yen RP can offer higher interest income than simply leaving the money as a cash balance.
The newly introduced Japanese yen RP offers an annual rate of 0.35% (pre-tax) for the on-demand product, based on rates posted on June 1. For fixed-term products that lock up funds for a set period, yields range from 0.45% to a maximum of 0.55% (pre-tax) annually, varying by holding period. Trading is available from 9:30 a.m. to 3:30 p.m. on business days through Korea Investment & Securities' mobile trading system (MTS) and website. However, if a fixed-term product is redeemed before maturity, only 50% of the originally agreed rate will be paid. The posted rates may be adjusted depending on market conditions. Korea Investment & Securities also supports U.S. dollar (USD) foreign currency RP investment. Dollar transactions are available 24 hours a day, with automatic trading also supported.
