Eurex, the European derivatives exchange joint-owned by Deutsche Börse and SIX Swiss Exchange, has reported healthy volumes in its Korean KOSPI options contracts, with over 500,000 contracts traded since its launch on 30 August 2010.
The figures represent strong foreign demand for the world's most liquid derivative, which traded a total of 1.67 billion contracts in the first half of 2010 according to the Futures Industry Association.
Eurex reports that average daily volume of KOSPI contracts has been steadily increasing, with 11,000 contracts traded daily in March. It recorded a daily record of 64,000 contracts on 18 January. Furthermore, the exchange has reported that bid-ask spreads for the Eurex KOSPI product have narrowed considerably since its launch.
Currently, 11 KRX and Eurex members are active in the Eurex KOSPI product, including two market makers. There are 12 additional KRX and Eurex members who are preparing to participate in the Eurex/KRX Link.
“Our Eurex KOSPI product has been very successful since its introduction,” said Michael Peters, executive board member at Eurex. “This is due to our close partnership with the Korea Exchange to offer our customers access to the most widely-traded index derivative contract in the world. Our participants do not only trade via the order book but also use our block-trading functionality, which allows members to place OTC transactions directly and efficiently into the Eurex clearing system.”
“This milestone reflects the high acceptance of the Eurex KOSPI Product as an investment tool for global investors. KRX and Eurex will continue to work closely together with market participants to develop ways to further increase liquidity in the Eurex KOSPI Product,” added In-Soo Kim, KRX executive director.
The Eurex KOSPI product is a daily futures contract based on the KOSPI 200 options available on the Korea Exchange. The futures contracts expire at the end of each trading day and any open positions are transferred to KRX to establish a position in the KOPSI 200 option. This enables market participants to trade KOSPI 200 options during European and North American trading hours.
Eurex and KRX plan to further stimulate liquidity of the KOSPI contract by developing the after-hours market.