Complaints over brokerage system failures more than doubled from a year earlier. Toss Securities, a strong player in overseas stock trading, received the highest number of customer complaints. The surge appears largely attributable to a sharp increase in trading volume amid a booming stock market, but investors continue to face confusion as compensation standards for system failures vary by brokerage.
View of Yeouido’s securities district / Chosun DB
According to the Korea Financial Investment Association on May 6, complaints over system failures at 59 domestic brokerages totaled 103 in the first quarter. That marks a 128.9 percent increase from 45 cases in the same period last year. By category, system failures accounted for 15.1 percent of all complaints, which totaled 680, up 10 percentage points from 5.5 percent a year earlier. Other categories included trading-related complaints at 13.1 percent, or 89 cases; product sales-related complaints at 24.3 percent, or 165 cases; and others at 47.5 percent, or 323 cases.
System failure complaints refer to complaints filed by financial consumers who claim they experienced inconvenience or losses in using services such as order placement, execution, account inquiry or transfers due to errors in electronic financial transaction systems, including mobile trading systems, home trading systems and websites. Among the top 10 brokerages, system failure complaints fell from 852 cases in 2022 to 101 in 2023 and 64 in 2024, before surging to 12,043 last year.
By company, fintech brokerage Toss Securities recorded the highest number of complaints with 19 cases. On the night of Jan. 2, Toss Securities suffered an incident in which some U.S. stock orders were not properly received through its mobile trading system. On the night of Jan. 14, an error occurred in which stocks and account balances were not displayed on the MTS home screen. On Jan. 21, deposits and withdrawals were halted after some accounts were classified as reported accident accounts. On Feb. 26, another system failure occurred in which the amount available for won-denominated orders was displayed differently from the actual account balance on its MTS and web trading system.
“A temporary system failure occurred in some cases due to an increase in users and trading volume amid the recent boom in the domestic stock market,” a Toss Securities official said. “Based on a thorough analysis of the cause of the failures, we will work to prevent similar cases from recurring.”
Kiwoom Securities, which drew more than 10,000 system failure complaints last year, followed with 16 complaints in the first quarter. On Jan. 21, Kiwoom Securities experienced an error during after-market trading in which confirmation of MTS order executions was delayed. Mirae Asset Securities came next with 12 cases. A representative incident occurred after the market close on March 4, when a large number of delayed ETF price-drop alerts were sent through its MTS. Woori Investment & Securities followed with 9 cases, Shinhan Securities with 7, Eugene Investment & Securities with 7 and Samsung Securities with 5.
Number of system failure complaints by brokerage in Q1 / Reporter Yoon Seung-jun
Of course, not all brokerages received complaints over system failures. Among major brokerages with equity capital of 3 trillion won or more, KB Securities, NH Investment & Securities and Hana Securities recorded zero system failure complaints in the first quarter.
The increase in system failure complaints at brokerages is seen as largely attributable to a surge in trading value. In the first quarter, the average daily trading value on the KOSPI and KOSDAQ markets stood at 43.8269 trillion won, up 138.6 percent from 18.3649 trillion won in the same period last year. The number of stock investors also rose sharply. As of the end of March, the number of active stock trading accounts reached 103.67 million, up 5.38 million from 98.29 million at the end of last year. This was a sharp contrast to the increase of 2.72 million accounts in the first quarter of last year.
“Simply increasing spending on IT systems does not solve the problem. Brokerages need to accurately identify the causes of actual failures and invest in the areas where investment is needed,” said Hwang Seok-jin, a professor at Dongguk University’s Graduate School of International Affairs and Information Security. “Insufficient monitoring and load testing for sudden spikes in traffic appear to be among the reasons system failures keep recurring.”
Despite the rise in complaints, it remains unclear whether they will lead to compensation for damages. Under the Electronic Financial Transactions Act, financial firms may be held liable for damages in the event of an accident, but there are no specific common standards for compensation related to system failures. Whether compensation is granted and the scope of losses covered are determined according to each brokerage’s internal criteria. Investors must directly prove their intent to trade and the fact that they suffered losses through system logs, phone records or other evidence. Even if an investor missed a buying or selling opportunity due to a system failure, it may be difficult to receive compensation equivalent to the actual loss unless the possibility of order execution can be verified.
“When investors are unable to buy or sell stocks on time due to a system failure, it is realistically difficult for them to prove the damage,” said Kang Hyung-koo, vice president of the Korea Finance Consumer Federation. “Mechanisms should be put in place to prove trading intent, such as access records or phone order records. Compensation standards should not differ from one brokerage to another. There is a need to unify damage assessment standards and establish best-practice guidelines from a consumer protection perspective.”
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