![[Exclusive] 'Blue Ocean's service resumption delayed by lack of transparency'](/_next/image?url=https%3A%2F%2Fwimg.heraldcorp.com%2Fnews%2Fcms%2F2025%2F02%2F19%2Fnews-p.v1.20250219.6a3634fd64954043830cbf41a90618ba_T1.jpg&w=3840&q=100)
[Exclusive] 'Blue Ocean's service resumption delayed by lack of transparency'
US alternative trading system Blue Ocean and former partner firm Fundamental Interactions trade blame over massive system outage in August
US alternative stock trading platform Blue Ocean has been unable to resume its trading service in South Korea for months with no clear explanation. The main reason could be its lack of transparency in dealing with last August's server outage, according to the CEO of a former partner company that is currently engaged in a lawsuit with the system's operator, Blue Ocean Technologies.
Fundamental Interactions, a developer of enterprise market center technology platforms, previously provided its systems to power the Blue Ocean Alternative Trading System, including when a massive server outage occurred last year on the afternoon of Aug. 5. Investors in Korea saw orders worth 630 billion won ($437 million) canceled as a result.
Blue Ocean Technologies explained that its matching engine failed to handle the surge in trade volume triggered by a global stock market sell-off over fears of a US recession. Fundamental Interactions CEO and co-founder Shawn Sloves argues, however, that Blue Ocean's 'repeated negligence' in not upgrading its infrastructure led to the 'preventable system failure.'
'Fundamental Interactions repeatedly recommended capacity upgrades to Blue Ocean in response to the sharp increase in transaction volume, but Blue Ocean ignored these requests,' Sloves said in an email interview with The Korea Herald.
Following the system failure, Blue Ocean ATS migrated to a new technology platform, MEMX, explaining the move had already been planned. It also promised that another failure would not happen with the new system.
Fundamental Interactions claimed that Blue Ocean Technologies misrepresented the situation and misled the industry into believing Fundamental Interactions' software was at fault, affecting its market reputation. The company filed a lawsuit against Blue Ocean in September in the New York Supreme Court, which is currently reviewing the case.
Sloves further suggested, "The allegations against Blue Ocean Technologies could significantly impact South Korean authorities' decision to allow brokerage firms to resume trading with Blue Ocean Technologies."
"Its public statements misrepresented the true cause of the outages, eroding market confidence and regulatory trust."
Since the system crash in August, local brokerage firms have halted trading through Blue Ocean ATS. The standstill has left Korean investors unable to respond to market changes outside of regular US market hours because all brokerage houses here provided trading of US shares during Korea's daylight hours through Blue Ocean Technologies since it first built ties with Samsung Securities in 2022.
With Korea as its biggest market prior to the outage, accounting for 65 percent of its trading volume, Blue Ocean Technologies has been working to resume service with local brokers.
Its top executives, including CEO Brian Hyndman, visited Seoul earlier this month to meet with counterparts at local brokerage firms and the Korea Financial Investment Association, which represents the firms and has been seeking the regulatory nod. Blue Ocean even set up a Seoul office to better communicate with the local market.
Yet the service remains stalled for no clear reason. While officials from local brokerage houses said the country's top regulator, the Financial Supervisory Service, has to approve any resumption, Sloves said the real problem is Blue Ocean Technologies' unwillingness to take responsibility for the outage.
"Given the importance of market stability and compliance, South Korean regulators may hesitate or delay approval until Blue Ocean Technologies demonstrates substantial improvements in infrastructure, risk management and transparency,' Sloves said.
Meanwhile, Blue Ocean Technologies responded that the lawsuit by Fundamental Interactions is 'frivolous and without merit.'
'We are actively engaged with our legal counsel and working on a motion to dismiss these charges,' said Silvia Davi, the firm's spokesperson.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Korea Herald
8 hours ago
- Korea Herald
Korean battery-makers push President Lee for direct subsidies
Korean firms seek bolder funding as Chinese rivals leverage robust government backing South Korean battery manufacturers are urging President Lee Jae-myung to act as they face slowing electric vehicle demand and intensifying competition from Chinese rivals increasingly dominating global markets. On May 31, three days before the presidential election, Lee wrote in a Facebook post, 'I will recharge the South Korean economy with K-batteries,' underscoring his belief that the battery industry is key to driving Korea's next economic leap. Lee's pledges included strengthening research and development to secure cutting-edge technologies such as all-solid-state batteries; introducing domestic production tax incentives; creating a "battery triangle belt" connecting the Chungcheong, Yeongnam, and Honam regions; increasing battery demand through energy storage systems; and nurturing the battery recycling industry. Calls for IRA-style subsidies While industry insiders are optimistic about the domestic tax incentives, they anticipate a more direct form of financial support from the government. Lee's tax benefit pledge offers tax breaks for companies producing and selling battery products in Korea, similar to the US Advanced Manufacturing Production Credit under the Inflation Reduction Act. However, AMPC also includes options like 'cash refunds' and 'third-party transfers' in addition to tax benefits. 'If we could receive cash returns, we'd have more flexibility to expand investments in global markets — particularly in the US, where rising tariffs on automobiles and parts are already dragging down the EV market,' said an industry source on condition of anonymity. The source emphasized that additional support measures are needed, pointing out that unlike China, which offers subsidies from direct funding to state-led R&D programs, the Korean government has only granted corporate tax credits. Under the Act on Restriction on Special Cases Concerning Taxation, the battery industry is designated a national strategic technology, making it eligible for approximately 15 percent and 30 percent tax credits on facility investments and R&D, respectively. However, these credits apply only to companies that are generating taxable profits. In the first quarter, Korea's top three battery makers — LG Energy Solution, Samsung SDI, and SK On — all reported operating losses, even when factoring in benefits from AMPC. As a result, they are likely ineligible for domestic tax breaks, despite having collectively borrowed 49.6 trillion won ($36.5 billion) for large-scale investments both at home and abroad. Chinese surge Experts suggest that even with the battery sector's strategic importance, direct subsidies from the Korean government remain unlikely. 'Korea has traditionally been wary of direct funding due to the associated risks and concerns over misusing taxpayer money,' said Kim De-jong, a business professor at Sejong University. 'In contrast, while China provides massive subsidies, it often gains substantial control over the company's management and operations.' Kim added that more feasible alternatives to direct subsidies could include offering discounted rates on electricity and water for domestic production facilities. Meanwhile, Chinese battery giants CATL and BYD have strengthened their grip on the global EV market. According to SNE Research, CATL and BYD held market shares of 38.1 percent and 17.3 percent, respectively, as of the latest period, up from the previous year. LG Energy Solution ranked third but saw its share fall from 12.3 percent to 10.2 percent. SK On and Samsung SDI also experienced declines, with market shares dropping to 4.3 percent and 3.3 percent, respectively.
Korea Herald
12 hours ago
- Korea Herald
Samsung chief visits Songdo to boost bio push
Samsung Electronics Chair Lee Jae-yong visited Samsung Biologics' campus in Songdo, Incheon, on Monday, a move interpreted by industry observers as an indication of his commitment to nurturing the bio sector as the group's next major growth engine following semiconductors. According to industry sources, the chair toured the Songdo campus of Samsung Biologics alongside key executives, including Samsung Electronics Vice Chair Jung Hyun-ho and Samsung Biologics CEO John Rim. During the visit, he reportedly inspected production facilities and process equipment and held strategic discussions with senior management. Since assuming leadership of Samsung, Lee has emphasized the importance of developing the bio business into a future growth pillar on par with semiconductors. In 2022, he attended the completion ceremony of Samsung Biologics' Plant 4 on the Songdo campus. Samsung Biologics surpassed 4 trillion won ($2.9 billion) in consolidated annual revenue last year, becoming the first Korean biopharma company to reach the milestone. In a strategic move to bolster competitiveness, the company announced on May 22 the spinoff of Samsung Bioepis into a newly established holding company, Samsung Epis Holdings. Under the reorganization, Samsung Biologics will continue focusing exclusively on its core CDMO operations. Samsung Epis Holdings will serve as an R&D-driven holding company responsible for biosimilar development, new technology investment and global strategy planning. By structurally separating its two growth pillars — CDMO and biosimilars — Samsung aims to build a more agile and responsive system that can better meet the demands of customers, investors and the broader market.
Korea Herald
13 hours ago
- Korea Herald
Seoul shares spike to 11-month high on hopes for policy backup, US-China talks
South Korean stocks rallied to their highest level in 11 months Monday, driven by gains in chip shares amid hopes for new policy measures under the Lee Jae-myung government and upcoming trade talks between the United States and China. The local currency rose against the US dollar. The benchmark Korea Composite Stock Price Index added 43.72 points, or 1.55 percent, to close at 2,855.77, extending its winning streak to a fourth straight session. It marked the highest level since July 16, 2024, when the index finished at 2,866.09. Trade volume was heavy at 528.24 million shares worth 13.61 trillion won ($10.03 billion), with winners beating losers 700 to 200. Foreign investors bought a net 980.0 billion won worth of stocks, while individuals and institutions sold 229.67 billion won and 721.53 billion won worth of stocks, respectively. The index opened markedly higher and maintained its momentum, as investors harbored hopes for eased global trade tensions ahead of a meeting between senior US and Chinese officials set to take place in London later in the day. Expectations have also risen for a set of measures by the Lee government aimed at bolstering the economy. During telephone talks on Friday, Lee and US President Donald Trump agreed to work toward a "mutually satisfactory" agreement on the US' sweeping tariff scheme, Seoul's presidential office said. Semiconductor and auto shares led the upturn of the index. Market bellwether Samsung Electronics rose 1.18 percent to 59,800 won, and its rival SK hynix advanced 2.0 percent to 229,000 won. Top carmaker Hyundai Motor surged 4.32 percent to 197,800 won, and its sister Kia Motors jumped 2.36 percent to 95,300 won. Leading biotech firm Samsung Biologics advanced 1.37 percent to 1.03 million won, and Celltrion gained 1.97 percent to 160,200 won. Leading financial firm KB Financial soared 4.14 percent to 110,700 won, and No. 1 steelmaker POSCO Holdings grew 0.39 percent to 258,000 won. Top online portal operator Naver increased 3.82 percent to 198,500 won, and Kakao, the operator of the country's dominant mobile messenger, spiked 16.03 percent to 51,400 won. But major battery maker LG Energy Solution sank 2.06 percent to 285,000 won, and defense giant Hanwha Aerospace dipped 2.76 percent to 880,000 won. The local currency was quoted at 1,356.4 won against the greenback at 3:30 p.m., up 2.0 won from the previous session. (Yonhap)
