A Sydney Trader With a Prop Shop in Seoul Is on a Hiring Spree
A Sydney Trader With a Prop Shop in Seoul Is on a Hiring Spree
(Bloomberg) -- An unusual kind of trading firm popped up in Seoul this year.
All the way from Sydney, Star Beta in February set up one of the very few -- if not the only one -- independent proprietary trading shops of the South Korean capital. It has already hired 16 traders, with a goal to employ 30 in total.
While banks often have prop-trading desks, which typically use leverage and trade with their own money, independent firms are rare in Korea as platforms such as high-frequency trading aren’t developed there yet, according to NH Investment & Securities.
“Many prop-trading firms in the U.S. or Europe are specializing in systematic trading, like high-frequency trading, while South Korean traders are lacking in know-hows in that technology,” said Gilbert Choi, a derivatives analyst at NH. “In Asia, Australia has some prop firms as there is European and U.S. capital invested.”
Sydney-based Star Beta, whose traders handle futures of all kinds of assets -- including cryptocurrency -- is seeking to nurture the growth of a professional trading community in Korea, a market where retail investors used to dominate, said Mark Zagora, its chief executive officer.
“The fact that Korea hadn’t had a prop shop was a reason for us to pioneer the industry,” said Ki Shin, the chief executive officer of Star Beta’s Korean office. The firm trains applicants for three months, with their compensation based on their profits and split equally between them and the company.
The Financial Services Commission, Korea’s top financial policy-making body, has been seeking to revive the nation’s derivatives market, which used to be one of the world’s most active but suffered after new rules emerged in 2011 to help curb speculation. It said in May it will ease some of the regulations to lure back local traders, including retail investors who accounted for more than half of the trades in Kospi 200 Index futures and options in the early 2000s.
While local investors have been shunning Korean derivatives lately, foreigners have been coming in. Last year, they accounted for about half of the total value of their assets traded -- or 22.7 trillion won ($19.4 billion), up from 17 trillion won in 2011, according to the FSC. To further attract them, the regulator said it will develop a variety of products, not just those tied to the Kospi 200 Index.
A group of ex-traders from Propex Derivatives, a prop firm in Sydney, founded Star Beta in 2015, naming the company from “Statistical Arbitrage,” or Stat Arb. The firm has another office in Poland and globally trades more than $4 billion on average each day, according to its website. Zagora, who started his career as a foreign currency prop trader at Westpac Banking Corp. more than 20 years ago, was a partner and a trader at Propex.
Star Beta’s traders in Seoul are still researching the market and aim to start trading assets tracking Korean futures later this year, Shin said. Kospi 200 Index contracts are particularly good because they also trade overnight, he added.
“We see lots of opportunities here,” Shin said.
--With assistance from Divya Balji and Matthew Burgess.
To contact the reporter on this story: Heejin Kim in Seoul at hkim579@bloomberg.net
To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Cecile Vannucci
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